This article is the first in a series of occasional articles discussing the purchase of a second home whether for vacation or investment purposes.
If you are in the market for a second home, you know — that beach or mountain house you always wanted — 2008 is shaping up to be a very good year for you to make your move.
Although some homeowners are finding it difficult to even keep up with their monthly payments, a significant number of consumers are looking at expanding their real estate holdings by purchasing another home.
Home Prices Have Declined
What is fueling the demand for second homes? Answer: the recent decline in home values has suddenly made buying a home at the shore much more affordable.
In the April 2008 issue of Money magazine, Your Money & Your Life columnist Jean Chatzy shared her desire to buy a home on Long Beach Island, New Jersey. This popular summer beach destination has seen home prices increase by as much as 25% annually until last year when the market reversed course, sending prices down by 13%.
Know Your Housing Market
Of course, the drop in prices in one vacation market doesn’t translate into an across-the-board decrease everywhere else. If you are searching for a bargain, then you’ll need to do your homework before investing:
- Obtain real estate comps (comparables) for homes in your desired market. A knowledgeable real estate agent can get this information to you and provide valuable information about local market trends.
- Read up on the area that interests you. Let’s say that you want to buy a home in Kure Beach, NC. Google the town and find articles discussing the town’s future, taxes, building rights, etc. Visit the town’s website for additional town news.
- Visit again and again. You may like a certain community in the summer, but not in the off-season. If you plan on spending time at your second home in the winter months, will there be enough for you to do to avoid boredom?
- Talk with a mortgage lender. You may be in terrific shape financially, more than able to meet your current obligations, with plenty of cash left over. Visit a mortgage broker now to see just how much home you can afford — financing rates for second homes have dropped in recent months.
Shop Around For Your Second Home
Finally, if you have decided that a second home is right for you, then shop around. With home values down in many areas, you could shave tens of thousands of dollars off of the asking price for some homes that an owner all to willing to quit. Your mortgage pre-qualification letter will come in handy at this time, just the right tool to help you make your best deal in 2008.
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