5 Signs You're Ready to Buy a Second Home

If you’ve ever purchased a home, you know that there’s a ton that goes into finding the right fit. From hunting through listing after listing, seeing homes in person, and making multiple offers to pre-approvals and loads of paperwork – the process is not for the faint of heart. 

Often, after finding the right house and settling in, the thought of purchasing a second home find its way front and center in your head. Maybe it’s for a summer house, to Airbnb, or to purchase as an investment. Either way, the smartest thing to do before making the leap is to evaluate your situation and answer yourself honestly: “Am I actually ready to buy another house?” While this can be a loaded question for sure, there are definitely a few key indicators that will give you a pretty good idea of whether buying a second home is a good choice for you right now. 

So, how can you know for sure? Ask yourself some important questions to get a feel for exactly where you’re at, and what you can take on. 

1. “Do I have flexibility in my income?”
   What kind of flexibility are we talking here? Well, to start, you’ll want to at least have the means to decorate two homes, travel back and forth (If they’re quite a distance from each other), pay taxes and maintenance fees, etc. Not to mention, the ability to pay both mortgages (or at least ensure you have the funds available in case something falls through in the case that you’re renting your second home or going the Airbnb route).
   You don’t want to be that person that takes the leap, purchases their second home, and then regrets it because they’re stretched to the limit monetarily. Be super honest with yourself. If you’re going to have issues, it might be worth holding off until you save more or find yourself in a different financial position. 

2. “Am I in a good place with my credit score and debt-to-income ratio?“
   If you’ve already been through the home purchasing process with a primary residence, you know that a good credit score can mean thousands of dollars in savings over time. You’ll want to make sure that, even with a second home, you have a credit score that can help you to get an excellent interest rate and save dough in the long run. Oh, and let’s not forget a decent debt-to-income ratio. After all, with a second mortgage on the bill now, you’ll want to be certain that things like loans and credit card debt are paid down, and that you’re not going to be in a position where you’re struggling to make any payments.

3. “Do I have the money for repairs on two houses (if I need it)?”
   Especially here in Arizona, repairs can come at the worst times. For example – how many people do you know that have had their air conditioner break in the sweltering peak of summer (we can name a ton)? Remember, a broken AC or home appliance can come when you least expect it, so you’ll need to make sure you have the money set aside for home repairs in both houses. Renting your second home out? It’s even more imperative that you have the money to ensure you’re being legally compliant and giving your renters a comfortable and modern space.

4. “Do I really have the bandwidth to take on extra responsibility?”
   Owning a second home is nothing if not time consuming. Not only are you going to have to part ways with a ton of time in the beginning (hello, house hunting), you’ll also need to decorate the home, pick out furnishings, make any upgrades or repairs, make arrangements for managing your property (if you’re renting it out), and so much more. Make sure you’re in a place in your life where this extra time, money and work won’t stress you out, or put you in a position where you’re cursing your previous optimism.

5. “Have I really thought through the pros, cons and worst case scenarios?”
   We know, thinking through all of the terrible things that could happen isn’t exactly uplifting. But you need to make sure you have the time, money, flexibility and capability to keep a second house afloat. If you’re on the fence, make a list of all of the pros and cons to help you make a decision. And make sure you have solutions to all of the worst case scenarios that can happen when it comes to owning property. For example, if something breaks, will you have the resources to fix it? If you’re renting and a renter completely bails on you, and you can’t find another renter for quite some time – do you have the ability to take care of mortgage payments? Again, we know. Not fun. But thinking through these things is totally necessary. 

At the end of the day, one of the best ways to be able to determine if you’re truly ready to make the investment in a second home is to talk to the experts. That means chatting with your real estate agent about what you’re wanting to do, your goals, and how you think a second home can play into that. As well as chatting with a loan officer that you trust to determine your financial position, and what you need to do (if anything) to make your dream become a reality 

You may be closer to your multi-home dream than you think.