If you have decided to purchase a second home (whether to serve as your vacation getaway, as investment property, or during your retirement years) here are a couple things you must remember to do before finalizing the deal.
1. Secure financing even before you decide on a home. Getting pre-qualified and then having the mortgage will let you know what kind of house you can afford to buy. Since it will most likely be your second mortgage, expect to pay a higher interest rate on it, and maybe to qualify for less. Once you have your total budget worked out, set aside funds to make the down payment on your new home. Most lenders will look for a debt to income ratio of under 36% before they will grant a second mortgage. This means that your total debts, including your first mortgage, should come to only about a third of the income you bring in every month. Be prepared to pay around 20% of the purchase price on your new home as a down payment. You may need to take these funds out of your personal savings, or consider borrowing against your retirement fund or life insurance policy.
2. Take steps to protect your new home. A second home is always an investment, and you must always make sure to protect your investments. A few things you can do to protect your newest asset include getting a home inspection before purchasing, getting title insurance, and getting hazard insurance.
If you are planning to buy a home, let The Incorvaia Team make the process as easy as possible for you. Call us at 440-879-7130 today!
