![]() ![]() Residential rental property: a home you buy with the intent to rent out to others to make a profit.There are two main kinds of investment property: Investment property is real estate that is not a primary or secondary residence for you or your family and has a primary purpose of generating income, taking advantage of tax benefits and profiting from appreciation. ![]() To qualify for a second-home loan, it must be located a specific distance from your primary residence or in a vacation or resort area such as near the ocean or by mountains. This can include a vacation home, retirement home or a condo in a location where you frequently conduct business. Second homeĪ second home is one that you plan on living in, in addition to your primary residence for certain parts of the year. People routinely use the terms “second home” and “investment property” interchangeably, not realizing the differences between these two types of properties. Decide the type of second property you want Finally, down payments for second mortgages tend to be higher, sometimes requiring 20% or more of the total purchase price. If you haven’t paid off your first mortgage, your lender will want to know that you can afford both mortgages along with other costs such as insurance, fees and taxes. Interest rates for second mortgages are usually a quarter to half a point higher than first mortgage interest rates. Decide what you can affordĪn essential first step in deciding if you should purchase a second home is determining if you can financially afford to do so. Buying a second home can be tricky, but with preparation and some help from experts, you can make an informed decision that’s right for your situation. ![]()
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