By Geoff Williams and Annalisa Burgos, FrontDoor.com | Published: 10/23/2009
You're at a stage of your life where you're successful and making good money. Perhaps you've paid off the mortgage on your home or are close to doing so. You've got steady income and good credit and see potentially profitable opportunities in the housing market. Or maybe you're just at the right place at the right time.
Philip Norman and his wife, Linda, for instance, weren't looking for a second home. They were at their favorite vacation spot, near Palm Springs, when they came across an old flyer on a new-looking house in a gated community on a golf course. Out of curiosity, the 49-year-old business owner from Springfield, Mo., looked at it, saw the asking price and was stunned. "We couldn't pass it up," recalls Norman, who ended up opening his wallet last May.
Buying a vacation home or investment property is a great way to expand your real estate portfolio. But not everyone should necessarily whip out the checkbook and call a real estate agent. If you're going to buy a second home, ask yourself a few questions first.
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HOW YOU KNOW YOU'RE READY TO BUY A SECOND HOME
Two words: disposable income. Put simply, you've got money to spend, and real estate is where you want to put it.
Aside from money, age is another factor you should consider when buying a second home. According to Jeff Chervenak, branch manager of the mortgage lender Guaranty Federal in Farmington, Conn., the sweet spot for buying a second home is in your fifties.
It's easy to see why, especially if you're a fiftysomething who's a parent. If you have kids, they're probably well out of the diaper stage and have graduated college. You probably have more free time to devote to a second home, whatever your reasons for wanting one -- as a vacation retreat, as an investment or possibly because you simply want a second place to hang your proverbial hat.
Whatever the case, think this through so you don't buy something that's going to become a drain on your finances or something that you simply aren't ready to tackle yet.
WHAT TO CONSIDER BEFORE BUYING A SECOND HOME:
Interest rates have crept up, but refinancing may make sense for you.
Purchase price, interest rate, taxes and PMI determine your monthly payment.
Find out if owning a home will save you money.