Buying your first home is a rollercoaster—exciting, overwhelming, intimidating, and rewarding. There's lots of advice out there for first-time homebuyers, but what should you expect when it's your second time buying a home? Things can change quite a bit in just a few years, but there are some things that remain the same no matter how long it's been, and for the most part the process to buy your second home is almost the same. Read on to help you make the decision to buy a second house, what to expect, and things to consider.
How Much Should You Have Saved to Buy a Second Home
This depends on how much you want to spend and the type of house you're looking to buy. Generally, you should have something like 10-25% of your total loan amount saved as a down payment because requirements are stricter when your goal is to own two homes. Other than your down payment, you should also have enough savings to cover two to six months of mortgage payments (for both houses). Lastly, think about maintenance costs, which will obviously double with two homes. As a general rule of thumb you should have 1% of your home's value saved to pay for any maintenance that will inevitably come up so try to have a separate savings account set up with enough to pay for the maintenance of two houses.
How Do You Know if You Should Buy a Second Home
You make enough money to pay two mortgages, but have you thought about how often you'll be able to use a second home? Would you be able to take time off work or family obligations to go often enough to make paying for a second home worthwhile? They can be great for those who are retired or can work remotely, but it may not be worth it if you can only go for a weekend here and there.
If you plan to invest in a second home, it's a good idea to have a plan on how you'll use it. We're talking more than how often you'll be there physically, but a plan for maintenance as well. How will you open and close up a home if it's in a seasonal area, like a lake house or mountain retreat? If it gets below freezing during the winter, how will the pipes be taken care of for example? If you won't be at both homes often enough to take care of tasks like these, rethink whether you actually should buy a second home or make the extra investment in paying for a reputable property management company or enlist a trusted neighbor to do so.
Is a Second Home a Good Investment
It can be for sure, but that also depends on your individual situation and what a second home can mean to you personally. Always consult a professional when you're considering big investments like this, but for many, a second home is a good investment. It can help you earn additional income in the future when you decide to sell, provide a retreat from everyday life, and if you decide you want some extra income you can rent one of your homes at some point. It really just depends on how you feel about having a second house personally, what you can comfortably afford, and what purpose you'll use it for (vacation, secondary residence if you travel between two locations a lot, or investment property).
Buying a Second Home in Another State
You're in good company if you want to buy out of state—lots of people have decided to buy a vacation or investment property a ways away. With a little upfront planning and research, it's doable. What's a good idea for buying your first home is a good idea for buying your second home; you'll want to keep in mind exactly what you want to do nearby this home (if using for vacation, do you want beachfront? Nearby hiking trails?), the cost of living in the area so you know how much you'll be spending to maintain and spend time there, and how much you should expect to pay for a house on average in that area, and finally make sure you've seen the area in person.
The biggest thing is finding a real estate agent you trust so you know you're getting the help you need. You may not have the time or money to travel to visit lots of open houses, but an agent you mesh well with should know what you're going for and be able to help you find a home you love with minimal hassle.
We're here to help!
At WaFd Bank, we know navigating the buying and selling process can be tricky. We've been specializing in helping people achieve their home ownership dreams for more than 100 years. To find out more, contact one of our neighborhood branch managers or call us at 800-324-9375.
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