Open post

Buying A Second Home? 8 Things To Consider

Buying a second home is a major expense. You might have several reasons for wanting to buy a second house. Perhaps, you’re buying a second home for vacations or weekend getaways. Or, it might be that you want to use it as a rental property for rental income. However, there are things to consider before buying a second home.

The benefits of buying a second home

If you’re buying a second home for rental income, you’ll benefit from many perks, especially tax advantages.

For example, you will be able to deduct interest, property taxes, homeowners insurance and other expenses against the property’s income.

Even if the value of the property declines, you will still be able to deduct depreciation from your taxes.

While these benefits are great, the mortgage requirements for a second home are much stricter than for a mortgage on your primary residence. So, make sure you can afford it.

8 Things To Consider When Buying A Second Home

1. Financing options: When you bought your first home, you had available to you what’s called an FHA loan – a government loan program.

FHA loans are an appealing and favorite choice among first time home buyers due to their relatively low down payment requirement.

FHA loans require a 3.5% down payment and a relatively low credit score of 580. However, FHA loans are not available to second home buyers.

That is because FHA requires the home to be the borrower’s primary residence. So, if you’re thinking of buying a second home, you will need to either use a conventional loan or financing it with your own cash.

2. A larger down payment: If you’re using a conventional loan for your second home, you will need to come up with a larger down payment.

Lenders for a conventional loan usually requires a 20% down payment of the home purchase price.

But for a second home which will be used as a rental property or vacation home, expect lenders to ask for 30% or even 35%.

3. A higher credit score. For an FHA loan, you only need a credit score of 580 to qualify. But for a conventional loan on a second home, you will need much higher credit score — usually 750 or higher.

4. Expect a Higher Interest Rate: Lenders will likely charge you a higher interest rate on your second home than your primary residence.

The reason is because they see a second home — be it a vacation home or a rental property — as riskier. They feel that you are more likely to default on a mortgage on your second home than on your primary residence.

5. Do your research: Just as you did your homework when you bought your place to live in, buying a second home is no different.

In fact, you’ll need to spend more time researching rental property. That means researching the neighborhood you will want to invest in, knowing the zoning laws for a particular area, the sales price for the homes in the area.

You will need to know if the area has adequate public transportation, schools, grocery shopping, etc,– things that potential tenants will need.

6. Be prepared to be a landlord: if you’re buying a second home to rent, be prepared to be a landlord.

And be prepared to deal with all of the headaches that come with being a landlord. Do you have sufficient time? Can you deal with problems?

Owning a rental property and being a landlord is time consuming. It is also hard hard work and you have to do your due diligence.

You can hire a property manager to run the property for you. But if that is not feasible, you’ll have to do it yourself.

That means, screening new tenants, collecting rent, dealing with delinquent tenants, fixing problems in the property, such as a broken pipe.

So before buying a second home, make sure you have sufficient time and make sure you can deal with the day-to-day headaches that come with being a landlord.

7. Do you have a stable income? Dealing with a second mortgage on your second home is doable.

While you may be able to afford upfront costs, if you don’t have a stable income, you may have to think twice about whether it is a good idea.

Plus, you still have to consider the additional expenses of owning a second home such as insurance, property taxes, maintenance, repairs, property management fees, etc.

8. Are you out of credit card debt? If you have paid off outstanding and high interest credit card debts, then purchasing a second home may make sense.

But if you’re still struggling to pay your debt, you may need to put buying a second home on hold. 

The bottom line

If you’re thinking about buying a second home, whether it is for investment or vacation, be prepared to save some money, budget for expenses, and come up with a bigger down payment.

More importantly, spend as much time, if not more, researching for the home just as you did when your purchased your primary home.

Speak with the Right Financial Advisor

  • If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
  • Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com

Open post

Wine Country towns you can actually afford

You love​ the Napa lifestyle. The Napa prices? Not so much. If your budget is more “house blend” than “rare vintage,” you might assume that you’re priced out of a life among the vineyards. Not so. We found four wine country towns where you can sip local vino on your patio without dropping a fortune on your house.

Median sales price: $296,500

Palisade, where the median sales price is under $300,000. Photo: njplantguru/Instagram

Like Traverse City, Palisade has a microclimate that allows the area to grow produce you wouldn’t think was possible in Colorado. Its most notable crop is wine grapes—the area is home to two-thirds of the state’s vineyard acres and a quarter of its wineries. Orchards, vineyards, tasting rooms, and wineries are everywhere in this small town, and they’re all full of local Chardonnay, Merlot, Cabernet Sauvignon, and Sauvignon Blanc. At Varaison Vineyards and Winery, locals show up on Fire Pit Fridays for s’mores and wine tastings. Residents enjoy outdoorsy adventures at Mount Lincoln and Mount Garfield and weekend festivals like September’s Colorado Mountain Winefest.

With wineries are spread throughout town, locals are never far from one, regardless of their address or budget. Here, living near a winery doesn’t require a million-dollar bank account. The good life can be had with a median sales price of $296,500.

Interested? You can have your own view of the mountains from this tidy five-bedroom for sale in Palisade for $339,357.


Median sales price: $252,111

The view from this Walla Walla home is a wine lover’s dream.

When Italians started immigrating to Walla Walla in the late 1800s, they came with a gift: winemaking know-how. Unfortunately, it would take nearly 100 years to figure out how to make grapes survive the often-fickle weather here. Today, the area is knowns for its Cabernet Sauvignon, but you’ll also find plenty of vines producing Merlot, Syrah, Cabernet Franc, and Malbec. There are more than 120 wineries in Walla Walla, including one owned by NFL star Drew Bledsoe and a mini-winery cluster on the grounds of the local airport.

Though locals take their wine seriously, the Walla Walla vibe is as light-hearted as its name. This is a city where one of the best restaurants is found in a gas station—Andrae’s Kitchen, run by acclaimed chef Andrae Bopp. And in the wineries around town, you’re likely to find winemakers mixing with patrons, or in the case of Julia Russell of Mansion Creek Cellars, teaching them flamenco moves.

Though still somewhat under the radar as a wine region, Walla Walla is getting more attention all the time. Get ahead of the crowd while the median sales price is a friendly $252,111.

Interested? This three-bedroom charmer is available now for $250,000 in Walla Walla.


Median sales price: $288,500

Overmountain Vineyards sits on a 70-acre parcel east of Tryon. Photo: pryorreggie/Instagram

This small town of 1,700 in the heart of North Carolina’s horse country has a well-deserved reputation as an oasis for the arts. Many artists, actors, and writers (including F. Scott Fitzgerald) have lived in this town near the Blue Ridge Mountains.

Locals and visitors love the galleries, independent bookstores, and restaurants along Trade Street, but the Tryon Foothills Wine Country has become an even bigger attraction. Protected from extreme weather by the mountains, the Tryon Foothills have the longest grape-growing season in the state. In fact, the area has been famous for its prime grape-growing conditions for well over a century. Today, the area produces a large variety of wine grapes, including  Cabernet Sauvignon, Merlot, Cabernet Franc, Chardonnay and Sauvignon Blanc. At Mountain Brook Vineyard, grapes are harvested entirely by hand. And over at Overmountain Vineyards, a father-daughter team handcrafts French-style wine.

Interested? Even the address of this sunny two-bedroom in Tryon is right: it’s on Vineyard Road. And at $269,500, it’s less than the median price of $288,500.


Median listing price: $220,650

This home for sale in Traverse City comes with a vineyard.

The mountain-like dunes on the shores of Lake Michigan aren’t the only quirk of geography for Traverse City. Its location near the lake gives the city ideal conditions for producing cool-climate grapes, a feat not possible anywhere else in the region. Wine experts love the area’s Rieslings, and both Chardonnay and Pinot Noir are popular Traverse City varieties, too. And there’s more praise still for the natural beauty at the area’s 35 wineries, especially those on the panoramic Leelanau Peninsula. Whether you’re gazing over Grand Traverse Bay from Chateau Chantel or at the rolling fields of lavender of Brys Estate, the views pair perfectly with the wine.

Though Traverse City is a favorite among summer vacationers, it doesn’t shut down after the high season. Most wineries remain open year-round, and the arts and entertainment scene stays busy with galleries, events, and film screenings at the restored vintage State Theatre. With a median listing price of $220,650, you’d have room in your budget to explore it all.

Interested? You can find an adorable three-bedroom for sale in Traverse City for $229,900.


Ready to find the wine-country home of your dreams? See what’s available now on Trulia.

Source: trulia.com

The Homebuying Journey with Love and Renovations

Hello, Homes.com! My name is Amanda Hendrix and I blog with my husband, Corey, at Love & Renovations about DIY, home decor, and how we make our builder-grade house in the suburbs of Austin feel like home. We are embarking on the process of selling our second home and moving into what will (hopefully) be our forever home, and we’re so excited to be sharing the journey here with you.

The House Hunt

We have always loved fixing up homes that need a little love, so when we began the process of searching for our third home we knew we wanted something that wasn’t updated and needed some work. We’ve always lived in homes that were a bit on the ugly side when we moved in because there’s nothing more satisfying than totally transforming it!

exterior of a gray and white homeexterior of a gray and white home

We were so confident in our plans that as we began browsing for a home we hid “new construction homes” in our Homes.com searches because there was no way we’d be buying a brand new build. We need an older house with character, ugly tile to demo, and old laminate counters that are so bad you have to shield your eyes when you walk in the room! I mean, what good is an “after” without a really bad “before”, right?! 

But then (there’s always a “but then,” isn’t there?), we decided to go scout some neighborhoods in our area on a whim one afternoon because we were antsy to look at houses. We pulled up to a gorgeous neighborhood with brand new homes and I cringed a little in my soul. However, I started to cringe a little less as we drove past the gorgeous pool and splash pad at the amenity center, the gym for the residents, and the walking trails throughout the neighborhood. I had never seen an older neighborhood in our area with all of this exciting stuff so I have to admit I was intrigued.

We love houses (obviously), and the kids were getting antsy so we decided to pop into the model home. Just for fun! We DEFINITELY weren’t going to actually buy a new construction home.

You’re sensing the foreshadowing, right?

We got to chatting with the saleswoman and found out they just so happened to be building a home in our exact budget, in the size we want, and that it would be finished right in time for us to close at our planned mid-November deadline. Oh, and did I mention it had pretty much all of the bells and whistles we could want? Upgraded flooring, a covered patio, a sprinkler system and two-story ceilings in the living room… I’m a sucker for two-story ceilings.

home under construction home under construction

I feel like the rest of the story tells itself – we drove out to a nearby neighborhood that had our layout as the model home, and I got teary-eyed standing in the living room because it just felt so right. All of the pieces fell into place exactly as they should and a couple of days later we found ourselves signing a contract for the new construction home we always swore we’d never buy.

And then the chaos began.

New Construction vs. An Older Home

We quickly learned that buying a new construction home is worlds different than buying a home that’s been previously owned. For starters, the builder requires you to have your home on the market within two weeks (ideally less) of signing your contract. If you aren’t under contract at least a couple of weeks after that then they start to get nervous. We had originally thought we would have a full six weeks to prepare our house before putting it on the market, but we were suddenly looking at a mere six days to get everything done that we wanted to do (photography, marketing, etc) – and that list was long, my friends.

I went on a DIY spree in my house and managed to get the entire list crossed off just in the nick of time, but there were definitely a few stressful moments!

Another big difference when building a new home is all of the choices! When you’re buying a home that’s already been lived in, it comes as it is (unless there are issues to be fixed), but when you’re buying new construction – even a spec home like ours – you get to have some input in the design process. About a week after we signed our contract we got to go out to the design center for our builder and change out some of the finishes that had been decided on for the home. Our house was far enough along in the process that we were only able to change the flooring, but that was the big thing we wanted to change, anyway! If you get in on the process earlier, you’ll have way more options – it’s staggering how many decisions go into building a new construction home!

construction of a new homeconstruction of a new home

Finally, the other big difference we’ve noticed so far comes during the inspection process. When you’re buying a previously-owned home, you generally have one inspection sometime during the option period. With new construction, however, you get to have a few different walkthroughs of the home throughout the building process and you can (and should!) bring an inspector to all of them!

The builder will likely tell you that they have an inspector they work with, but you should always hire an independent inspector to come with you to each of your walkthroughs to check things out. The builder must fix anything that the inspector finds isn’t up to code, so you are guaranteed to walk into a home that has zero issues – which, let’s be real, is a huge perk over buying an older home! It’s a little more expensive to have multiple inspections, but it’s well worth the peace of mind to know that your home is in tip-top shape.

We’ve still got a long way to go on our home buying, and selling, journey, and I am so excited to be able to share the details with you here on Homes.com! If you want some more insight on new construction and the potential benefits, check out this post about the pros and cons of new construction and this post that talks about what new construction upgrades are worth the splurge


Amanda and Corey Hendrix

Amanda & Corey Hendrix bought their first home in 2011 and love to share their renovation and decorating adventures on their blog, Love & Renovations. They love to encourage homeowners to have the confidence to make their house a home, and believe that anyone can tackle DIY projects in their home. You can follow their adventures at loveandrenovations.comInstagramFacebook, or Pinterest.

Source: homes.com

Open post

My home buying story: How VA loans helped this service member buy a home

Name: Chris V.

Year: 2004

City: Kapolei

Occupation: Army

Age: 21

Salary: $20,000 + $1,300 a month housing allowance

Home Price: $160,000

Chris and his wife, Nichole, had only been married for a couple of years when they bought their first home in 2004. Like most young couples, they didn’t have enough income for a giant mortgage or pile of cash for the down payment. To make matters worse, Chris and Nichole were house hunting in Hawaii, the most expensive housing market in the nation.

The median housing price in Hawaii then was $460,000, a big number for a couple of 21-year-olds living on an Army salary. But Chris and Nichole had an edge: a Veterans Administration loan, or VA Loan. This is a type of home financing guaranteed by the federal government that helps current and former military families buy a home or pay for home improvements.

Here’s how a VA loan helped them reach their homeownership goals.

It got them into the market with no down payment.

Chris and Nichole made a home-buying budget work for one reason: they didn’t have to pay a dime for a down payment. One of, if not the best thing about a VA home loan is that it allows veterans to buy without putting any money down. As anyone who has bought a home knows, you can spend half your life saving enough cash for some mortgages. Chris and Nichole would have needed $32,000 for a 20% down payment on a $160,000 mortgage—more than his entire salary for 18 months.

But with zero down, they were able to budget for a $160,000 home. Chris was stationed at Schofield Barracks outside Honolulu, so he looked at housing in nearby Kapolei, a planned community developed in the 1950s. They looked at condos because a single-family home was not in their budget. He and Nichole ended up buying a 660-square-foot condo home.

A couple stand outside of a condo near Honolulu

Chris and Nichole in front of their first home—a condo outside Honolulu.

It earned them great terms.

Plenty of young home buyers know they can be trusted with a mortgage, but lenders don’t take people’s word for it. You know whose word they do trust? The government’s. While many first-time home buyers end up paying extra fees and interest until they can prove themselves super credit-worthy, VA loans help veterans and active service members get into homeownership without those extra costs.

Since VA loans are backed by the government, lenders consider them to be less risky and grant favorable terms to buyers with a good credit score and the ability to repay the loan. Chris and Nichole got a competitive interest rate and didn’t have to pay closing costs or get PMI (private mortgage insurance). “We got cash back at closing,” Chris says. “And not having PMI knocked quite a bit off our monthly payment compared to a traditional loan.”

VA loans helped them grow—even during the recession.

Fast forward to 2009. Chris was a Bronze Star recipient back from a tour of duty in Iraq. He has left the Army and is working for a software firm in Hawaii. Nichole is pregnant with their first child, so it was time for them to look for a bigger place to live.

There was one problem. The Great Recession had hit two years earlier, and housing prices had collapsed. It wasn’t a great time to sell, so they wanted to hang on to their condo and rent it out, but they weren’t in a position to both keep it and make a down payment. Once again, a VA loan saved the day, even though Chris was now a civilian. Veterans can get VA loans after they leave the service. It’s a benefit they keep for the rest of their lives.

They bought a 1,400-square-foot house in Waipahu, an area of Honolulu, for $575,000, with no money down. And instead of selling the condo and taking a loss, they refinanced it with a traditional lender and turned it into a rental property. “We had to refinance with a regular lender to stay under the VA lending limit with the house,” he says.

Chris and Nichole celebrate their second home with their first child on the way.

Two years later, in 2011, his job took him to the East Coast, where they decided to rent. They also rented out their house in Hawaii, along with their condo because it still wasn’t a good market for sellers.

“We owed $25,000 more for the house than we could sell it for, and we would have agent fees on top of that,” Chris says. “We definitely didn’t have the cash at that point to make up the difference.”

A third VA loan allowed them to arrive at their ideal home.

In 2013, Chris took a job as a software engineer in the San Francisco Bay Area with Trulia. Nichole was pregnant with baby number three, and she sent Chris off to California with clear instructions. “She told me ‘Buy me a fricking house,’” Chris says. “She did not want to live in a hotel.”

It took him just three weeks. “I looked at thousands of places online, but only a dozen in person,” he says. He ended up buying a 2,336-square-foot house in Pleasant Hill for $700,000—a great deal in a town with a median sale price of $813,500. Again, he bought with a VA loan.

The neighborhood, Gregory Gardens, is vibrant and full of trees. “You felt like you were in the forest, even though you were in a neighborhood,” Chris says. There’s a Bay Area Rapid Transit station nearby for easy commuting. His three kids have a big yard and plenty of neighborhood children to pal around with.

Between Chris’s career taking his family through some of the priciest housing markets in the country and the housing market crash nearly derailing their finances, VA loans truly came to the rescue for Chris and Nichole—an appropriate benefit for the veterans, active service members, and their families who come to their nation’s rescue all the time.

“(VA loans are) one of the best military benefits,” Chris says. “We couldn’t have bought our first home without it, and we wouldn’t be where we are now without them.”

Wondering what homes you might be able to buy with a VA loan? See what’s available now on Trulia.

Source: trulia.com

Scroll to top