Buyers seeking a second home aren't alone; their desire for another property is shared by millions of people around the U.S. These primarily exist in Florida, California, New York, Texas, Michigan, and Hawaii.
Before searching for homes for sale in Wailea, buyers should be aware of the long-term responsibilities that come with owning two homes to decide if now is the right time to invest.
Twice the financial burden
For example, if you have a sewer pipe problem in your main residence and then, a short time later, your HVAC system needs repair in your second home, you’ll have two substantial back-to-back bills.
In addition to the unforeseen issues that may occur, there are double the regular expenses associated with owning a second home. Such costs include HOA fees, rental management fees, utilities, property taxes, mortgage payments, and even travel costs when visiting your second home.
When it comes to buying a home, constructing an accurate budget is paramount. Be sure to include additional costs like flood insurance and possible appliance replacements. Unforeseen or long-term costs can add up if not originally accounted for.
As you contemplate living in Wailea, keeping your long-term objectives in mind is crucial. Consider if this purchase will still allow you to save for retirement and how much debt you currently have. Moreover, ask yourself whether the proposed house will cut into an emergency fund and if your current home is paid off. The more of these elements that are taken care of before acquiring a second property, the better equipped you will be to make a purchase.
How to finance a second home
Applying for a loan to finance your second home is not as intimidating as many people think, and it's pretty similar to applying for a primary mortgage. Consider your financing options, including securing a second home mortgage, taking out an equity loan or line of credit from your current residence, or refinancing with cash-out from existing mortgages.
Utilizing a home equity line of credit (HELOC) or other low-interest products to consolidate your high-interest credit card debt can make it easier for lenders to have confidence in buyers. Additionally, if possible and feasible, waiting until most of the first home has been paid off or until all extra debt has been settled could help strengthen a financial situation.
Making the trip
Purchasing a second home shouldn't compromise travel to other places. If one enjoys being in the same destination annually, then it may be wise to invest in a property there. However, if a buyer's long-term plan includes exploring different parts of the world every year, keeping up with expenses for two homes could become difficult. Consider both options when making this important decision.
Renting as supplemental income
When budgeting for a second home, homeowners should also account for the costs of cleaning services, upkeep, home management, and insurance. However, covering these costs (including the mortgage) could mean the homeowner must sacrifice their desired time in the residence due to renting it out. Additionally, the highest demand from renters will be during peak season, which is probably when a buyer most wants to enjoy their second home. For the reasons listed above, it is crucial the buyer considers long-term goals and works with a trusted realtor or financial advisor to determine if renting the home out is right for them.
Reasons to consider buying a second home
Investing in a second home can be an excellent way to branch out beyond stocks, bonds, and a 401(k). Second-home buyers stand to benefit from real estate appreciation over time while also having something valuable to leave to any children.
Not only can a second home be financially beneficial, but it also allows you and your family to have quality time together in one special place.