Many people consider the idea of purchasing a second home to be too expensive. They may already have a mortgage on their primary house and be unwilling to take out another loan for a home they will not live in that much, but few realize that there are benefits to buying another property.
The first benefit to a second home is that it eliminates hotel costs when going on vacation. For those who tend to travel to the same area every year or who want to spend the summer or winter months in a different climate, the savings can actually be significant.
Most homeowners who have a second mortgage also are not directly paying for it. Instead of purchasing it as a vacation home, they buy it as a rental property and then rent it out on selected dates through services such as Airbnb. However, it is important to note that vacation properties and rental homes are not financed the same. Those who buy the property as a vacation home are likely to get a better interest rate.
There are several other factors homebuyers need to be aware of when considering buying a vacation home. They will likely need to have a down payment of ten percent, if not twenty. Lenders also look for high cash reserves and a strong credit score.
Second homes are an investment that can potentially provide higher returns than the cost of the mortgage, so investigate your options thoroughly.
Moneytips can help you refinance your existing home loan.