You’ve likely heard plenty of city residents complaining about the high cost of living, while also hearing less and less about the next generation becoming homeowners. Some suspect this is the result of a post-recession economy, and some say that student loan debts loom too dangerously overhead. But while some city dwellers are hesitant to buy homes in high-cost areas, they may be willing to buy a “second home” while renting their primary residence.
The Trend
That’s right, people are purchasing vacation or second homes, even while still renting their main home. Since the cities where many work and primarily live have expensive housing markets, they are looking elsewhere to use their savings while continuing to pay their (somewhat) more affordable monthly rent.
Disappointed by what their budget may be able to afford in a more highly populated, in-demand area, they are investing in beach, ski, lake and country homes. With historically high home prices in cities, the difference between primary and secondary home prices is often large — and these people want to feel like they are getting what they pay for.
The Cost
In addition to monthly rent at the city residence, you will have to make your monthly mortgage payments on the new home. This can be a big change from what you are used to so it can be a good idea to work on the practice budget before you actually have both costs. You may find you need to cut back in some areas to cover the cost of both homes.
It’s also a good idea to proceed in the process of getting a mortgage as if this is your first home purchase — because it is. (So, before you start shopping, it’s smart to check your credit score and know what sort of terms you can expect. You can get two of your credit scores for free on Credit.com.) And be sure that you are calculating the second property’s additional monthly expenses aside from mortgage payments. These include things like utility bills, transportation back and forth between homes, homeowners insurance, property taxes and any necessary home or yard maintenance for that new property.
It’s a good idea to have more money socked away than you expect to spend because these costs often creep up on new homeowners and accumulate quickly. You may also experience new concerns and stresses because now you do not just own a home, but you own a home you cannot necessarily check on every day.
The Benefits
These new homeowners often still want the benefits of homeownership and the opportunity of real estate investment, without having to downgrade their living style. In fact, this option can enhance it.
A second home in a new area opens up a second lifestyle, often with features you can’t get in a big city or where you primary residence would be. From skiing, boating, pools, animals, beach access, bike trails, sporting opportunities or even just land to explore, having a second home can give you that amazing and priceless feeling of freedom that only fresh air and new adventures can bring.
Buying a home is always a big decision. Even though getting a vacation home may feel like a luxury, a second property can open up a new world for you and your family. It’s just important to make sure your budget can handle the extra housing costs.
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