Second Home Purchase: Budgeting and Other Tips
In part one of this two-part blog series, we went over some of the basics on why certain homeowners choose to purchase a second home. Often for retirement or vacation purposes, or even sometimes to allow parents to live close by without entering a nursing home, the purchase of a second home can be enormously beneficial – but those going this route will have to consider some of the important details along the way to ensure they make a smart purchase.
At Altius Mortgage and our partners at Mortgage Ogden, we’re here to help. We offer a wide range of home loan options, ideal for everyone from first-time homebuyers to those considering a second home purchase – plus many others in between. While part one of our series looked at some of the top reasons why you might consider a home, today’s part two is for those who have already decided to move forward with a second home purchase. Here are some important details to attend to:
Proper Budgeting
First and foremost, in many of the same ways you’d budget and prepare for a mortgage and other expenses for your initial home, you have to take on the same themes here for a second home. Many of the steps here are similar or even identical: You should start by meeting with one of our lenders to discuss your situation, plus obtain pre-approval that not only gives you an idea of what you can afford, but allows you to prove your purchasing power.
In addition, keep in mind additional expenses and closing costs. These include home maintenance costs, taxes, utilities, and possibly more than one type of insurance coverage. Especially if you plan to rent out your second home for any period of time, this is a vital area to consider.
Taxes
While there are some tax deductions available for a second home, similar to for your initial home, they’re more limited. For instance, tax deductions on a second home are limited to a total of $10,000. In cases where you’re renting the second home, rental income will only be tax-free for the first 14 days – after this point, taxation is required.
Is a Consolidated Mortgage an Option?
A consolidated mortgage refers to a situation where your current remaining mortgage is folded into the new mortgage you take out on your second home, creating a single loan. In some cases, a consolidated mortgage will offer you great interest rates that makes it easier for you to manage payments on both homes. Speak to our staff about whether a consolidated mortgage might be an option for you if you’re considering a second home.
For more on purchasing a second home, or to learn about any of our mortgage rates or home loan services, speak to the staff at Altius Mortgage today.
