Buying a second home in Brevard, FL presents unique benefits as well as challenges. Buyers should be ready with the right amount of cash, credit and real estate agent in order to score a good deal on a second home.
Buying a second home makes for a lucrative investment, as well as a great excuse to take more vacations. A second home can also be used as rental property, in which you immediately begin generating profits from the home as soon as the mortgage is paid off.
No matter your goals or the reasons you want to buy a second home, Curri Properties is here to help. We specialize in Brevard luxury waterfront properties, and know exactly what it takes to buy a second home here.
#1. Know How Much You Can Afford
Before you start shopping for a second home, settle on a budget that you feel comfortable spending. Keep in mind that it’s not as simple to qualify for a second home. Sure, you’ve already proved capable of paying a mortgage, but you’ll have to show you are qualified to afford both your current and new mortgage. While bridge loans were popular pre-financial crises, today you must qualify for both mortgages in order to have two homes.
#2 You’re Going To Need Cash
Most lenders require something along the lines of 2-months cash ready to go for mortgage payments. You may need to prove this money exists in a checking account in order to get approved for the loan. This money must be set aside for the first two mortgage payments and cannot be used for closing costs or other expenses. If you are purchasing a second home as investment property, you’ll need as much as 6 months of mortgage payments set aside in an account. You may need more than that if your credit score is below 680.
You’ll also need cash for your down payment. Vacation homes are a competitive market, and a percentage of buyers pay with all cash. Selling to an all cash buyer is an incentive and so the more cash you have to put down, the greater the chances you’ll get a home that’s in high demand. Mortgage loans for investment properties often require at least 20% to 25% down payment.
#3. Get Your Credit Ready
Your credit score is super-important when purchasing a second home. The rate you get on your second-home mortgage is based largely on your credit score. The higher your credit rating, the lower the interest rate on the loan. That translates to a lower monthly mortgage and ultimately paying less for the home when everything is said and done. Lower credit scores typically require more cash up front.
#4. Find A Real Estate Agent That Understands The Local Market
When buying a vacation home or a second home in an area you are not as familiar with, it’s easy to overpay or purchase a home in a less than ideal part of town. Pick an agent that specializes in the type of home you want to buy. If you are looking for a second home on the beach, a real estate agent that specializes in suburban condos isn’t your best bet. Working with a real estate agent that is highly familiar with the local market and neighborhoods you are attracted to gives you insider knowledge that’ll save you money and help you get the best deal on the best house.
#5. Understand How Taxes Work For Second Homes
There are different tax rules regarding second homes. Florida taxes are some of the most affordable in the country, but it’s still important to know every last expense you’ll be faced with. Tax rates vary depending upon how many days a year you plan to rent out the home, if you plan to live in it and so forth.
#6. Identify Your Property Goals
Take out a pen and paper and jot down your goals for your second home. Do you want to rent it out all year long? Or, do you plan to use it solely as a family getaway? Perhaps you plan to keep it free of renters all year long, or only rent it out during parts of the year. These things will influence the best location for your second home. This is also the time to decide where you want the house to be located, right on the beach or on a golf course? As well as, how many bedrooms does it need to comfortably fit everyone you plan to host there?
Curri Properties would love to help you find and secure the perfect second home for you. Contact us today to get started!