MiNorth RealtyMiNorth is a proud partner with GMAC Mortgage. Helping you get the best mortgage for your first, next, vacation or new built home.
Purchasing
* Buy your first home
* Buy your next home and move
* Buy a vacation or investment home
* Build a new home
Benefits of Owning a Second Home
Whether it?s a vacation home or a rental property, a second home can give you many of the same personal and financial benefits as your first home. Make sure you understand the tax implications before you buy, however, so you can make the most of your home investment.
Lifestyle benefits
If your second home will serve as a personal getaway, you?re probably looking forward to having a place to relax with family and friends. Whether it?s a lake-side cottage or a condo by the beach, knowing that you can retreat from the hustle of daily life to your own private vacation spot has an obvious appeal.
Financial benefits
Investing in a second home has the potential to pay off in a number of ways. First, there are the same financial rewards that come with homeownership in general: tax-deductible interest* and possible price appreciation. In addition, you may be able to use the home as a source of rental income. If it?s a vacation home, renting it out for part of the year can help offset the costs of ownership. If it?s strictly a rental property, you can use it as a significant source of income?although the tax implications may be somewhat different.
Tax implications*
You can deduct the mortgage interest you pay on a second home, but not on an investment property. Which category your home belongs in depends on how you use it. To the IRS, a second home is one that you personally use at least 14 days per year, or at least one day for every 10 days it?s rented out, whichever is greater.Although you can?t deduct mortgage interest for an investment property, you can deduct operating expenses (such as maintenance and advertising costs) that exceed the rent you collect, as well as losses on the sale of the home. Neither is deductible for a second home.
Have Your Credit Pre-Approved
Getting a credit pre-approval means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances. A credit pre-approval shows sellers that you’re a qualified buyer and helps you establish a clear price range.
The credit pre-approval process
The process of applying for a credit pre-approval is the same as a typical mortgage application, except that it doesn’t include information on the property you will purchase. Your loan officer collects information on your credit, income, assets, and debts, and sends this information through an underwriting system. If the underwriting process determines that you qualify for a loan, you receive a loan commitment for up to a certain amount, which is contingent on the property meeting certain criteria.
Benefits of having your credit pre-approved
There are many good reasons for getting a credit pre-approval before you buy a home:
- It makes your home search more efficient by allowing you to focus only on homes you know you can afford.
- It lets sellers know that you can back up your offer, so they don’t have to worry about whether you can get a loan.
- It lets you know early in the process if you will have difficulty getting pre-approved, so you have a chance to address problems before finding a home.
- It gets most of the mortgage process out of the way up front, so you can complete your transaction quickly after you find a home.
Pre-qualification
Like having your credit pre-approved, getting pre-qualified can help you determine your price range. The difference is that pre-qualification does not involve a credit check and is based only on your stated income, assets, and debts. Because of that, a pre-qualification can’t give you as precise an estimate of your buying power as having your credit pre-approved. It also doesn’t carry the same weight with sellers because your credit is still a question mark.