15
Jun
By support
Home Mortgage Tips

The Pros and Cons of Buying a Second Home to Rent

The Pros and Cons of Buying a Second Home to RentWith the ever-fluctuating cost of housing, buying real estate can be one of the best investments a person can make. However, a lot of important factors can be left out of the final decision when it comes to purchasing a home as rental property.

If you are taking the initial steps to invest in a second home, here are some important things to consider before you make the financial commitment.

The Distance To A Destination

Many people who purchase second homes to rent out choose to buy in places that are sought after, whether it’s a trendy area or beachfront property. While buying a home in a popular area may end up being good for your bank account, areas like this can often be out of the way and will take a little bit of car time to get to. If you’re doing the landlord duties on your own, this may take up a lot of precious evening and weekend time.

A Potential Vacation Home

There is certainly a great financial boon to be found in a home that you can rent out year round, but if you’ve purchased in an enviable location, this can also be a great place for you to take your family for a couple weeks out of the year during low-rental season.

While this may mean no rental income for a time, the savings of having a home at which to hang out can make up the difference. Of course, if it’s a place you won’t want to vacation, it may not be the right choice for you.

The Possibility Of Additional Income

If you’re planning to purchase in a cool new area or by a university, there’s a good chance you’ll have no issues finding a good renter as long as you have a nice property. However, while renting out a home can seem pretty straightforward, it’s necessary to consider how many months out of the year the place will actually be rented.

Many people go into this type of purchase expecting it to be occupied all year around, but demand can shift from season to season and this will directly impact the upside of your investment.

There are a number of benefits associated with owning a second home for rental property, but it’s also important to be aware of the financials downsides that can come from taking on another property.

If you are currently considering an investment property, you may want to contact your local mortgage professional for more information.

14
Jun
By support
Home Mortgage Tips

Boomerang Home Buyers: 4 Things to Consider Before Stepping Back into Homeownership

Boomerang Home Buyers: 4 Things to Consider Before Stepping Back into HomeownershipWhether you’ve gone back to renting for the sake of money saving or recently downsized to a more compact space, the idea of owning a home can be a big responsibility that may require more than you’re willing to give. If you’re considering jumping back into the fold of home ownership, here are a few things to contemplate before re-entering the market.

Is It Affordable?

Many people avoid home ownership for a long time because of the high cost of a down payments and the associated property taxes and maintenance fees, but it can be easy to forget these extras if you’ve been out of the game. Instead of being blindsided, sit down and determine these additional costs before putting an offer down on anything.

Is It Really What You Want?

With all of the conversation around the market that says it’s best to buy now, it can seem like having a home is a necessity for a secure financial future. However, if home ownership is something you feel pressure to do, it may not be worth such a sizeable purchase. Instead of jumping in, ensure you’ve determined what such a significant investment means to you first.

Does Home Ownership Match Your Lifestyle?

It’s easy to be aware of the financial benefits of buying a home up front, but simply because it may suit your pocketbook doesn’t mean it serves the life you’re living now. You should first consider the things in your life that have changed, as a new home may not have all the nearby amenities you’re used to and there may also be a lot of maintenance and yard work you’ll have to take on.

Is It A Good Investment?

If you’ve decided that delving into another home is really the right thing for you, you’ll want to make sure it’s the kind of purchase that’s really going to be fruitful down the road. It can be easy to buy in a popular neighborhood or by the beach, but instead of going for what’s right now, consider communities that will be popular in the future as this may maximize your investment potential.

Many people make a second foray into home ownership for a reason, but it’s worth being clear on what your expectations really are so you don’t end up with an investment you’re not interested in holding onto. If you’re currently considering your housing options, you may want to contact one of our mortgage professionals for more information.

10
Jun
By support
Home Mortgage Tips

The Pros and Cons of Mortgage Rate Locks

The Pros and Cons of Mortgage Rate LocksIf you’re just jumping into the game of home purchasing, you are likely considering all of your loan options and may even have heard the term mortgage rate lock. For those who don’t like to gamble, a mortgage rate lock can offer a bit of reassurance, but there are also some downsides to this type of protection. Before signing off on this, here are the details on rate locks so you can make an informed decision.

What Is A Rate Lock?

For many people who are buying a home in such a tumultuous market, the idea of interest rates can make the heart race a little faster, but this is the purpose of rate locks which offer consistency in a market in flux.

Instead of having to deal with day-to-day fluctuations of the rate – which increases or decreases what you owe – a rate lock is a lender promise that you will be held to a specific rate or your rate will not rise above a certain number.

Easy Balancing Of The Budget

The easy thing about utilizing the rate lock, especially for a buyer who is less familiar with the market, is that it will enable you to instantly determine your monthly payments based on that rate. Instead of having to pay more per month, you’ll be able to estimate exactly what your payment will be and it won’t rise above the limit you’ve set for yourself. While daily fluctuations can be a drag, a mortgage lock takes the guesswork out of the day-to-day.

The Added Cost Of Security

It might seem like a rate lock is an option that everyone would utilize, given the stability, but lenders charge for this type of offer because of the risk factor. While lenders can certainly stand to gain if your rate lock is higher than the interest rates, in the event that they rise beyond this point, they will end up losing money. So, while a 30-day rate lock may not end up costing you, this type of lock stretched over a longer period may actually end up costing you more than fluctuating rates.

If you’re not familiar with the world of investing and interest rates, a mortgage rate lock can sound like a great idea; however, there are downsides to this offer and they’re worth considering before getting locked in. If you are currently on the hunt for a home, you may want to contact one of our mortgage professionals for more information.