Are you thinking of buying a second home in Arizona? Acquiring a second home the act of buying a residential building in addition to your primary residence. Perhaps you intend to rent it out or to stay at it for only a part of the year; whatever the reason be, acquiring more property is never a bad idea, and buying a second home in Arizona may be even better.
Most people who consider buying a second home in Arizona do so because they intend to use the house as a vacation home, others may consider renting out the space for some extra cash flow.
When buying a second home in Arizona, there are different things to consider. First of all, you might want to apply for a home loan if you can’t pay for a second home outrightly. Second home mortgage rates are similar to that of a primary home and you will be required to put down partial payment in order to obtain that loan.
Can I Get a Second Home to rent out?
Sometimes, you might be buying a second home in Arizona that you don’t intend to stay in but want to rent out instead. Such a house does not fall under the context of a “second home.” This property would be termed an investment property. Investment properties are defined as properties that you rent out or let someone else stay in for a defined period of time.
As long as you do not occasionally stay in that house, it can not be termed a second home.
Second Home Loans vs. Investment Property Loans
The mortgage rates for second home vs. investment property loans is another thing you need to look at. Usually, for house buyers to be qualified to apply for a second home loan, the property has to be located in a vacation area like a beach or mountainside or a certain distance from the buyer’s primary residence either within the same city/state or from a different state. Loans for second homes usually come with the following conditions:
- The buyer’s intention is to occupy the house.
- The property is not subject to any form of rental.
Most lenders wouldn’t approve a second home loan if the buyer intends to rent out the property. For example, a primary homeowner from the northern states seeking warmer climate in Arizona to spend the winter but wants to rent out his property at other periods may not qualify for a home loan. If you want to stay in the house only in winter and rent it out for the rest of the year, an investment property loan is more appropriate for you.
Make sure you understand the mortgage rates for a second home vs. investment property if you intend to take out a loan for either purpose.
Mortgage Rates for Second Homes vs Investment Properties
Normally, second home mortgage rates are similar to the rates for primary home mortgage albeit, with some slight adjustments.
In the case of investment properties, in a normal market, the interest rates on the loans are around 1% greater than the rates for the primary residence. The rates might be higher now that the market is being affected by the pandemic and other economic problems. This is due to the higher risk for lenders in such situations.
A good way to avoid these higher interest fees on investment properties is to make a higher down payment. This increases the level of trust from the lenders. A down payment of at least 25% would be needed in order to get a better interest rate on your loan.
What Else Should I Consider Before Buying a Second Home in Arizona?
You would need to pay for home insurance just as you did for your primary residence. Most insurance providers charge more for second homes because these homes are unoccupied for long periods, thus increasing the risks of fire, break-ins, or water damage.
You have to hire someone who would be checking on and securing your second home in periods when you’re absent.
You would be required to pay property taxes on your second home as you did with the primary home.
When looking to buy a second home or Investment property in Arizona, it is important that you know the difference between the two and to state clearly to your lenders what you intend to do with the acquired property thus to know what kind of loan you need.
Considering buying a second home in Arizona in 2022?
Navigating the maze of buying a second home in Arizona is much easier with the right estate agent in your corner. Armed with over 20 years of experience, Tammy has the knowledge to work through the intricacies and give you the best guidiace regarding buying a second home in Arizona in 2022.
Call her today at (480)-848-7173.