“It is relatively easy to qualify for a second-home financing,” Banfield says. “There is still a 10-percent-down financing option. You can even get cash-out on a second home. There is jumbo financing for a second home. It is a very liquid market.”
If you are looking to tap into any home equity you have accumulated on your primary residence to fund your second-home purchase, keep in mind that if you need the equity for an emergency situation, you may not be able to access it. Also, the days of leveraging one property to buy another with a minimal down payment are gone.
TAX IMPLICATIONS: Take into account the tax implications of your purchase. If you use your home as a true second home, you could get a tax deduction on mortgage interest payments, on the same terms as for your first mortgage, as well as for the property taxes.
If you rent out your second home, you will have to consider additional tax ramifications, particularly if the rental period extends beyond 14 days a year.
Also, in some states, taxes on a second home could be higher if the second home is not assessed on a homestead basis.
Poonkulali Thangavelu writes about mortgages and personal finance for Bankrate.com.
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