Why get a second home? As the current pandemic has proven, real estate remains one of the most stable and profitable assets you can own. If you’re planning your retirement, a beautiful home in a scenic New Jersey locale is the perfect place to spend your golden years. Is the break-neck pace of city living wearing on you? Having a vacation property makes it easy to go on a rejuvenating weekend jaunt.
That said, there are crucial considerations you have to know before purchasing Titusville, NJ homes for sale. Read on to know more:
Financing your vacation property
Since you already have a mortgage on your current home, you’ll have to clear higher standards of creditworthiness this time around. To begin with, your credit score should be impeccable—a rating of at least 725 is a must. And while you can get away with a 5% down payment on a standard home, most lenders will require at least a 10% advance on a vacation property. It’s also worth noting that you won’t qualify for government-backed mortgages such as FHA or VA loans.
Don’t forget about recurring costs
Your mortgage isn’t the only thing you’ll be paying on your second home. You have to foot the bill for recurring costs such as property taxes, maintenance, and repair work, too. And don’t be surprised if your insurance premium is higher; since your second home will be vacant (or occupied by renters) most of the time, it might be deemed a greater risk to insure.
Choose your location wisely
After buying a second home, you’ll likely spend most of your vacations there. That’s why you have to choose a location that you truly love so the experience doesn’t get stale. Look at communities that offer a wealth of activities so there’s always something different to enjoy each time you visit. Luckily, New Jersey has no shortage of amazing locales to choose from, including beachside and mountain destinations.
Take note of short-term rental restrictions
Most second homes also double as Airbnb vacation rentals, which helps owners subsidize the mortgage payments. That said, Jersey City has strict laws governing short-term property rentals. If you don’t live on-site, you can only rent out your property for a maximum of 60 nights. You’ll also need to secure a permit from the Division of Housing Preservation, which involves having your property inspected by local authorities. If you’re looking at Lawrenceville, NJ condos for sale, make sure that the homeowner’s association (HOA) allows Airbnb rentals in the building.
Get ready for rental income taxes
Where there’s income, taxes aren’t far behind. According to the Internal Revenue Service (IRS), you’ll have to pay rental income taxes on your property if you rent it out more than 14 days out of the year. Since your home is considered a rental property, you can’t deduct its mortgage interest in your tax filing either.
Are you interested in second homes for sale in Hopewell Township, NJ? Allow David DePaola to help you find the properties that suit your lifestyle and financial goals.