Buying a second home can be tricky, and buying a second home in another state can be downright challenging. Here is everything you need to know to make the process easier.
Can I buy a home in another state?
In the United States, there are no restrictions on home ownership in any of the 50 states. You can buy as many homes as you want whether for use as your personal residence (sometimes called owner occupied) or for rental purposes.
How many mortgages can I have?
While there is no legal limit on the amount of mortgage loans a person can have, most banks and mortgage lenders prefer to cap it at 4-5 loans. They do not want anyone, regardless of income, to stretch their resources too far. If your plan is to purchase a second home in a popular vacation area and earn rental income, you may prefer to talk to a lawyer about setting up an LLC for the purpose of not only securing funding but also to protect your personal assets from liability.
Can I live in one state and be a resident of another?
You can split your time between as many states as you like. For tax purposes, however, you must declare one state as your state of permanent residence. Once you decide on a state, you also need to file state tax paperwork with that state each year. Be sure to consult a tax adviser for specific information for your family.
How much do I have to put down on a second home?
How much you have to put down as a down payment depends on not only your credit but also your income. Your total housing expenses should not exceed 40 percent of your gross income. Most lenders prefer at least 20 percent down on second or vacation homes.
Do I need a professional Realtor to buy a home in another state?
Buying a house is a complicated legal transaction that can go south quickly when people do not understand the legal paperwork. Working with a licensed, experienced agent is always recommended when purchasing a home whether down the street or across the country.
When you work with a great mortgage broker and a professional real estate agent, they can guide you through the nuances of buying a second home in another state and can make the whole process seem like a breeze.