Are you thinking about applying for a mortgage for a second home, but are not sure whether this is the right time?
Even if you have been planning to buy a second home or vacation home for a while, it can be difficult to know if you have finally reached the point where you are ready to take the next step and apply for a vacation home mortgage.
Following are some signs that you might be ready to move forward and finance the purchase of a second home.
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- You have a concrete goal and plan for how to use the second home. For many people, owning a second home may be a lifelong dream, but not necessarily a concrete plan with a specific goal in mind. You should ask yourself how you plan to use this second home. What is your main reason for purchasing it? Is it for your own private use? Is it a financial investment? Do you plan to rent it out? If you have a solid answer along with a detailed plan for how it is going to work, that is a good indication that you might be ready to invest in that second home.
- You are ready financially to handle all required costs of owning a second home. Another sign that it is finally time to purchase a second home is if you have done the math and discovered that you could afford that home alongside your current financial obligations. As with your first home, your second home will require you to pay for more than just your mortgage. Along with those monthly payments, you will need to be able to afford property taxes and other maintenance costs, utilities, and more. If you have truly accounted for all the costs to your best ability, then this may financially be the perfect time to move forward.
- You are up to the task of handling the additional administrative work of owning two homes. Think about not just the money that you currently spend on your primary residence, but also the time and energy involved in managing your ownership of that single home. That work will compound with a second home. Do you have the time to commit to taking care of two homes? Are you able to handle the stress involved? If you’re planning to rent your vacation home out while you are not in it, that will entail even more administrative like work. Even though rental income is “passive” income, there is still quite a bit of work involved with keeping up with being a landlord. If you feel confident that you can keep up with the administrative tasks associated with both homes, you might be ready to apply for a mortgage for a second home.
- You have thought about contingency plans. In some cases, figuring out that you can afford a vacation home is as simple as knowing that you can keep up with the monthly payments on it even if the house is empty. But in other cases, you might be deciding to purchase that second home on the basis of rental income. Without that income, you might not be able to afford the house. In a perfect world, that would not be a problem. You would be able to count on that rental income rolling in consistently month after month. But that may not always be the case, even in an area where tourism is big. Dry spates happen. There are factors that you cannot control. Hopefully, you have already thought about this and have come up with a contingency plan if you have a short-term income shortage. You also, hopefully, have a long-term contingency plan in case you cannot keep the home.
- You have thought it through, and you are committed. Finally, even though a second home is a major investment, homebuyers purchase them on a whim surprisingly often. Even if you are prepared in every other respect, if you are not committed to owning a second home, you might want to reconsider. If it is something which will lose its appeal to you later down the line, you will then need to deal with the hassle of turning around and selling it. But if you are certain that a vacation home will offer you long-term value, you might be in the right place psychologically to make an offer on a second home.
Apply for a Second Home Mortgage Now
Blue Square Mortgage can connect you with competitive second home mortgage rates and favorable loan terms. If you are ready to invest in a second home now, please give us a call at (206) 352-6453 to schedule your consultation. We look forward to helping you achieve your goals.
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