Buying a second home – many people dream of it. Buying a second home is something of a rite of passage, like buying a car or getting married. It’s a great investment as well. It shows that you’re doing well financially and can afford to reward yourself. And since mortgage rates are still low, now may be a good time to take the leap.
Before you jump into buying a second home, it’s important to ask “why?” Answering this question will help you see where your priorities are.
You Can Afford It
Of course, your finances are the first thing to look at when deciding to buy a second home. Most 2nd home buyers are in their 40s or 50s and their children have left the house. They no longer have to stay in one place because of school, or work if they’ve retired. People tend to earn more or have more saved up by this point in life, giving them more financial freedom.
A Good Investment
A second home can be a great investment, but you have to do it right, as there are still risks. You should try to buy a home in an area that’s growing, which could improve the property value over time.
As we’ve noted, usually its individuals in their 40s – 50s that tend to buy 2nd homes. By that age, many are thinking about retirement. Buying a 2nd property is an ideal way to plan for that phase of your life.
Let’s say you want to retire to a sunny and artistic city such as Albuquerque (assuming you don’t live here already). Why not search for a home in the area you want to retire? That way you’ll already have the home and it will have increased in value until then.
Paying taxes are a big part of owning a house, so it’s only logical we should talk about the tax benefits. And the good news is that you can write off the property taxes on a second home. And it doesn’t matter if it’s an investment, rental, or for your own use. You can also deduct interest, insurance, and depreciation against your home’s value.
Buying a second home may not be for everyone. But if it’s something you can do, take time to consider the advantages and disadvantages before you make the big move.