November 2 2010 (Jeff Alan)
If you’re within a few years of retirement, now might be a good time to consider buying a second home while home prices and mortgage rates are low. It may sound crazy in this economy but taking advantage of what the market has to offer can be enticing.
Buyers who intend to use the place as a second home will pay the same rate as they would pay for a primary residence. A vacation home can be loads of fun, serving as a nice getaway spot for you and your loved ones.
If they intend to rent the property out until they retire and they need the rental income to qualify for the mortgage, lenders will consider that an investment property and charge a half to a full percentage point more.
With today’s current mortgage rates, paying that little bit extra if you need to rent the home until you retire would still give you an interest rate that would be considered historically low. A rental property can also boost your finances, giving you cash flow each month.
You should also think globally when it comes to second-home opportunities, especially if you’re considering a home that you may retire in. Why be bound solely to America, when exotic and low-priced areas of the world also beckon?
And although it seems like everything coming out of the news lately has been bad, with good financial planning, the idea remains “pretty compelling,” says Justin Krane, a certified financial planner in Los Angeles.
Tags: mortgage rates, retirement, second home, rental property, low mortgage rates, low home prices, vacation home