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Frequently Asked Questions about Buying Your Second Home

October 3, 2022

When you’re not a first-time home buyer – whether it’s your second purchase or tenth, you’ll most likely have unique opportunities and challenges. Although you have more experience buying a home for the second time than someone purchasing their first, you also have a home to sell and one to buy. That means double the “to-do list,” but it also means getting through escrow and closing on time has a whole new urgency. Here are some FAQs for second-time buyers.

Do I need to get pre-approved…again?

Yes, getting pre-approved should always be your first step when purchasing a new home. By working with a Homestead Loan Advisor before you start house hunting, you’ll be in a much better position when you find a property for which you’d like to make an offer.

What should I do with my current home?

You have two great options – rent it out or sell it. Most people will consider selling so the profits from the home sale can be used as a down payment for the new home. Renting, however, can be a great source of extra income, with the potential for maintenance problems and costs. Your choice will very much come down to the current market conditions and what you can afford to do.

What kind of down payment do I need?

Generally, the down payment for your second home will come from the sale of your first home. A larger down payment helps buyers avoid private mortgage insurance (PMI) and allows them to shop for something larger and more expensive without dramatically increasing their monthly expenses. Homestead Financial Mortgage offers customers a recast option that will enable them to buy a new home first and then make a significant, lump-sum payment on the principal of their existing mortgage after closing on the sale of their current home. A recast is a stress-free way to buy and sell your home in a competitive seller’s market. And the professionals at Homestead are very experienced in this little-known strategy.

How much home can I afford?

You may feel cramped in your starter home and need to expand, but it’s important to consider your budget. It’s essential to buy a home with payments you can afford that also allow money for repairs and potential upgrades you might wish to make. While it may be tempting to buy big, talk with your lender before shopping to ensure you know the price range you should be shopping in.

What do I need to do to prepare to move?

There can be a lot to handle, from planning your moving date based on your closing date to decluttering, packing, and booking your movers. Check out our top tips to help you prepare better for your move.

As a current homeowner, you will likely be more familiar with the home-buying process. Still, today’s significant shifts in real estate technology, the housing market, and the opportunities available to second-time home buyers are worth factoring into your buying strategy this time around. Make sure to talk with your Homestead Financial Mortgage loan advisor to ensure you are prepared for this new journey.

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