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Buying a second home is an exceptional opportunity. You can expand your real estate portfolio, creating an investment strategy for building wealth over the long term. It’s also nice to have a home, one you can use on the weekends to get away. Whether you want to buy a home on the beach, on a lake in a densely wooded area or a home across the country, your first step is securing financing.
Purchasing a second home does mean more responsibility. It may mean a second mortgage, insurance costs and property maintenance. You’ll be paying utilities, upkeep and taxes on a multiple properties. Using this information, calculate how much you want to spend each month in these areas. Then, you can start looking for the home that fits.
Buying a second home affordably is easier to do when you can apply a sizable down payment. Most often, home buyers need between 3 and 20 percent of the purchase price available as a down payment. The more you have, the less you finance or the larger of a home you can safely purchase.
With second homes, you may have additional avenues for securing that down payment. This includes savings, of course, but it may also include borrowing against the equity in an existing home to use as a down payment.
One of the challenges of buying a second home is proving to lenders you can afford the mortgage payment and other costs. There are loan programs available to help you, but the options are somewhat limited in terms of federally sponsored programs. You may have used a VA or FHA loan, for example, to purchase your first home. These are generally just for the primary residence, not second homes.
However, there are other loans available to you. Conventional loans, which are still some of the most commonly sought-after loans available, are available to most people. Lenders will look at things such as:
Like any other home loan, it will be backed by the value of the home you purchase. In that way, the home must be worth at least as much as you plan to borrow.
Debt-to-income ratios tend to be a big factor for most lenders. Fannie Mae-based loans often require a ratio that is up to 45 percent if you have at least 25 percent down and a moderate credit score. That means your monthly payments need to be under 45 percent of your gross income.
It’s also important to consider how you plan to use the property. Lenders need to know if the home will be vacant (getting insurance for it can be difficult). They also want to know if you plan to produce a second income from it. If so, you need to ensure your loan covers this type of use.
The good news is that most conventional lenders off second home loans. Find the dream home you’ve been looking for, and then work with a lender to secure the purchase.
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There is a lot of discussion today about whether or not a real estate agent is necessary for the most successful sale of your home. You may have all the required skills and experience to handle it yourself, but that’s hard to figure out if you don’t know what a real estate agent actually does for you in the process. They’re marketing savvy, have access to the local MLS (multiple listing service), professional history and ongoing training with the market, which are the main features they bring to the table, but what does that really mean for you?
You probably found your real estate agent the same way you plan to sell your home and even found this article – with an Internet search. Sure, you can post your listing in several places on the internet, but the best advertising covers a variety of media outlets. Your real estate agent will have their own website, will syndicate the property to listing sites and even send out print media advertising like postcards, signage and home magazines. You can do the majority of these things, but the costs to retail clients are often much higher than they are for B2B clients like your agent. In addition to actual advertising venues, your agent will work with you on home staging, curb appeal and professional photography to make your home look its best in all that high-end advertising.
Except for a few locations, all licensed agents are also members of at least one local MLS board. Some are members of two or more depending on their market area and the structure of the MLS relationships. It's possible for a do-it-yourselfer to pay a moderate fee and become part of an MLS board, but some require full agent licensing to join, and that can be an expensive and time-consuming process. This benefits you in multiple ways. First, your property goes into the MLS and syndicates out to anywhere that pulls that information. That means not only major sites but also each and every other agent in the same MLS’s website. That means more buyers looking at your property from more places.
A real estate transaction is a complex process with a lot of paperwork. It also generates legal agreements, which have more terms than just the price. Your real estate agent will be familiar with the entire process and therefore is in the best position to make sure you come out on top. They benefit when you benefit, so it's like having an extra person on your team in a race. Not all deals go through, and an experienced agent knows where to find those pitfalls and avoid them, or get you out of a deal that’s gone wrong with the fewest repercussions. In addition, your agent knows people. Not just other agents, interior decorators, photographers, and advertisers but other sellers and buyers. Most agents have multiple clients both buying and selling. Through these networks, your agent can find a buyer that loves your home that you otherwise wouldn’t have known it existed.
When it’s time to sell your home, going to the pros is the best decision you can make. Not only will you generally get a higher price for your home, it’s less work and often much quicker than trying to do it yourself. Talk to a variety of professionals in your area to find the one that is best for you.
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Whether you’ve been saving up for a while or you’re just getting started, getting into a home might be easier than you think. If you’re looking to buy a home, but you just aren’t sure about tying all your savings into a house, check out the various loan options with low down payment requirements.
A lot of misconceptions exist about the down payment required to buy a home. Particularly about the "20% down" rule. Even though many potential homebuyers think they need to save up that 20% — and they delay buying a home because they haven’t been able to — it’s actually not a rule. While it is a suggestion, and necessary for obtaining a “conventional” loan, it’s not required to buy a house. Some first-time buyers have the mistaken impression that having that 20% down somehow balances out a lack of stellar credit history, guarantees a better rate or a bigger loan.
None of this is true. It does improve your ability to qualify for a loan from a regular lender because it makes your loan easier for them to sell on the secondary market. Even with a 20% down payment, you’ll have to meet the 43% or less debt-to-income ratio to qualify for a loan. It also, however, means that you do not have to buy private mortgage insurance (PMI), which saves you the monthly outgo toward that premium.
On a side note, PMI is not your homeowner’s insurance. It is the coverage you pay for to protect your lender in case you default on your loan.
You can buy a home with less than twenty percent down, and in some cases, with zero down.
Here’s the skinny:
A Conventional 97 loan is one you may not have heard of. It is available through Fannie Mae and is a fixed-rate loan that requires just three percent down. The best part is that the down payment can come entirely from gifts by blood-related or marriage-related donors. A Conventional 97 loan cannot be greater than $484,350 (the number changes annually), requires a better than average credit score and is useful only for a single-unit dwelling. Conventional 97 loans are available to first time and returning homebuyers.
While not everyone qualifies for a lower or zero down payment loan, if you are interested in home ownership and tentative about investing a big down payment, one of these options may be right for you. Ask your mortgage broker to explain the options to you for the home of your dreams.
If you intend to sell your home, you may want to host a yard sale. Thanks to a yard sale, you can eliminate clutter from your residence. Furthermore, a yard sale enables you to connect with your local community and inform community members about your plans to list your house.
Ultimately, there are many ways to ensure a yard sale is an instant success. These include:
1. Determine Exactly What You Want to Sell
You know you have a lot of items you want to remove from your house before you add it to the real estate market. As such, you should allocate time and resources to determine which items to keep and which items to sell.
If you have a variety of items you intend to keep, you may want to rent a storage unit. With a storage unit, you can keep your personal belongings safe until your residence sells.
Meanwhile, with items you want to sell at your yard sale, ensure they work properly and look great. You also may want to perform research to determine a fair price for these items based on their age and condition.
2. Pick a Good Date for Your Yard Sale
A Saturday or Sunday morning is the perfect time to kick off a yard sale. Select a date and time for your yard sale, and you can start counting the days until this event takes place.
Of course, as you consider yard sale dates, be sure to avoid scheduling your yard sale on a holiday. And remember, if you start your yard sale early in the day, you can give visitors plenty of time to check out your event.
3. Promote Your Yard Sale Properly
Create yard sale posters and set them up around your community. That way, you can promote your yard sale to a large group of community members in the days leading up to your event.
In addition, you may want to promote your yard sale online. Social networks make it easy to share information about your yard sale and may help you reach many people beyond your city or town.
As you get set to sell your home and host an upcoming yard sale, you may want to reach out to a real estate agent too. A real estate agent can help you get ready for the house selling journey and ensure you can achieve the optimal results.
A real estate agent is a home selling expert who is committed to client satisfaction. He or she will help you promote your residence to prospective buyers, analyze offers to purchase your home and much more. Plus, if you have any concerns as you navigate the home selling process, a real estate agent can respond to them.
Want to sell your home in the near future? Host a yard sale, and you can move one step closer to eliminating clutter from your home and adding your residence to the housing market.
