If buying your dream home was the best and the biggest decision you made in your life, buying a second home can be an even better one. It will give you more financial stability by creating a steady source of income.
Yes, you do have to go through the entire process of home buying once again; but it can be worth the trouble if your decision is the right one. Nevertheless, here are a few questions you need to answer before you start looking for FHA leads to buy your second home:
What is Your Budget for Your Second Home?
Investing in a second home would mean making another huge purchase after your first one. Apart from the acquisition costs, you will also have to plan for your mortgage payments, taxes, insurance expenses, and maintenance charges, which will be more than what you paid for your first home (since this will be a rental home).
Find out the exact cost of owning a second home and set a budget. This should help you identify what homes you need to look at before you start house-hunting.
Have you decided on the location?
One important factor when looking at investing in real estate is location. And your second home is your source of income, you will have to look for a great location that will give you access to a number of facilities as well as avenues for entertainment. This will create more demand for your home and you can expect to get good rentals for a longer duration of time.
In case you are investing in a retirement home or a vacation home, you might want to look for a row house or villa in a quiet and peaceful area. However, you will still need access to convenience stores and hospitals.
What is the ROI you can expect from your second home?
Second homes are usually bought as a steady source of income and so the first thing you will have to consider is your Return on Investment. If you are looking at purchasing a home in one of the commercial localities, you can expect a higher ROI since the demand for houses in this area will always be high. In case you are finding this too expensive you can consider localities that are fast-appreciating. Although you may not get a high rental income right away, you can expect your rentals to grow with the value of your property appreciating.
How will you fund your second home?
This is the most important question you will have to answer before taking any step towards purchasing your second home. Do you want to go for a loan or would you rather pay from your savings? The down payment and the interest rate would be higher for a second home if you are applying for a mortgage. However, you can try an FHA loan.
If you are relocating to another city because of a job or role change, you can buy a second home through an FHA loan. Find out if you are eligible for one when you look for a lender through FHA leads.
If you are still paying the mortgage for your first home, here are a few options you can try:
- Take a cash-out to refinance and use the extra cash to make the down payment for your second home. You can check with your lender or contact a new lender via FHA leads.
- Pay back your mortgage early to eliminate your loan. If you have taken an FHA loan you won’t have to worry about any prepayment penalties
The Bottom Line
Investing in a second home can be incredibly exciting. With the demand for real estate properties on the rise and many lenders to contact via FHA leads, you should have no difficulties finding and funding for a home that suits your needs. Nevertheless, ownership of a second home does come with a few costs and responsibilities. Make sure you know what you are getting into before you jump into it.