ORLANDO, Fla. (Ivanhoe Newswire) — Owning a second home might sound like a dream come true. It could be a great vacation spot and a good investment all in one. But there are some downsides to consider.
Owning a home, it’s the American dream. But what about owning two homes?
“It depends on your net worth. It depends on what tax situation you’re in.” Women’s Wealth Advisor Celine Pastore told Ivanhoe.
There are some downsides to consider. It’s typically harder to qualify for a loan on a second home. The average down payment is around 32 percent, and you’ll probably need a credit score of at least 725.
Also, interest rates tend to be about a quarter to a half a point higher on the mortgages. And there’s maintenance to think about. If something breaks, you have to fix it. You’ll also have to prepare for increasing property taxes.
If you buy a condo, there will be homeowner’s fees and assessments. If you plan to rent out the property and you use a management company, you can expect to pay as much as 30-percent of the rental fee.
“That’s why I think it’s important that you work with a financial professional when you’re making these decisions.” Pastore explained.
These are just some things to consider before buying a second home.
If you rent out your second home for more than 14 days a year, you’ll have to report all your rental income. You can, however, deduct rental expenses. The tax rules are complicated, so be sure to check with a certified public accountant.
Contributors to this news report include: Julie Marks, Producer; Roque Correa, Videographer and Editor; Gabriella Battistiol, News Assistant.