Freeport 815-235-2111 — Galena 779-214-0461 — Galena Territory 815-777-3100

It’s winter in northern Illinois and you have been thinking this might be the year to start looking to buy that second home.  Whether the warmth of the Florida beaches, the Arizona golf courses or the mountains of Colorado are calling you, there are some things to consider before you take the plunge. The first item on the list should be the financial aspect of buying and owning a second home. Aside from the purchase price of the property, you need to factor in the costs of actually owning the home.  Taxes, insurance, utilities, maintenance and HOA (home owner association) fees need to be budgeted just as they would be for your primary home. Even though you may only be living there several months out of the year, remember you will have these costs 12 months out of the year. You may be able to rent out the home for the months that you are not using it which can help offset the cost. Don’t forget to consider the transportation costs to and from the property, especially if it is a great distance away from where you now live. If you will be getting a mortgage to pay for the home talk to your lender about the loan costs involved for a second home. Typically the down payment will be higher because it will not be your principle residence and there may be other additional costs as well. Property taxes and homeowner’s insurance may cost more too since you this is not your primary home. Don’t forget to talk with your accountant about how owning a second home could impact your tax situation.

Consider your requirements for a second home. Are you the kind of person who will be happy going to the same place every year or do you prefer to discover new destinations? Owning a property is a commitment that usually can’t be changed quickly so make sure you are ready to obligate yourself long term to the property.   If you don’t like the idea of spending every vacation in the same place then buying a second home probably isn’t for you.  Also, consider how often you would be able to use the home. If you are able to spend half the year there then it probably makes sense financially, but if you can only be there several weeks out of the year then you might be better off renting.

Look at your personal situation when determining what type of property to buy. Are you at or close to retirement age? If so, then a low maintenance ranch style home or condo would be a good fit. You don’t want to spend all your free time maintaining a huge yard or doing major renovations on a second home. Usually people purchase second homes in vacation or resort areas where there is plenty to do outside the home so low maintenance is preferred.  Buying a vacation home or condo in a resort community usually comes with homeowner’s association fees. These fees cover such things as snow removal, lawn & exterior maintenance and sometimes other amenities. If you are only living there part of the year it can be a desirable feature to look for so you don’t have all the maintenance issues yourself. Some condo complexes also have staff that will rent and manage the property for you when you are not living there for a fee. This type of arrangement can be very beneficial when buying a second home.

Just like any home purchase consider one of the most important aspects: location. You want to make sure the property fits your needs and is in a location you want -but also consider rental and resale potential. If you are looking to rent the property for the time you aren’t using it, make sure there is a rental market in that area that will allow you to cover your monthly  expenses. You also want to look at potential resale value in case you do need to sell the property. Consider having the property inspected before you buy to give you a true picture of the property’s condition as well as having it appraised even if you are paying cash. You are more than likely looking in a different market than you are living in and you want to make sure you are getting your money’s worth.

Follow these suggestions and do your homework. Just like with any home purchase, you need to weigh the costs and the benefits. Interest rates are still historically low and there are some great deals out there if you know where to look. Just some things to think about while shoveling that foot of snow in January!

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