Things I Wish I Knew Before I Bought My Second House
I just finished purchasing my second house. We bought our first four years ago, sold it, and then became "second-time homebuyers." First-time homebuyers get a lot of attention — there are numerous articles and tips about being a first-time homebuyer. And I read a lot before buying my first house. But second-time homebuyers? There's little advice available. Here are a few things I wish I knew before buying a second house. (See also: What to Look for in a Fixer-Upper)
1. Buying a Second House Has More Than Twice the Costs
As a first-time homebuyer, you rarely see any money coming out of your pocket towards the actual costs of buying a home (aside from mortgage costs). When you're a first-time homebuyer, you bring a large check for your down payment, but other than those for the mortgage, there aren't a lot of costs. But, when you are selling your first home and buying your second home, you really see how the fees of house purchasing stack up. The biggest chunk is realtor fees. The seller almost always pays both agents' commissions — usually it's about 6% of the sales price. Plus you have all of the costs associated with the mortgage on your second home.
2. You May Not Have to Come Up With Cash
When you buy your first house, you may save for years to come up with a down payment. Then, when it comes to closing, your down payment comes straight from your bank account.
I clearly remember how nervous I was about carrying my cashier's check to the closing of my first house. But, if everything works out financially, your second house down payment should come from the proceeds of your first house. Your years of paying your mortgage or otherwise spending money to improve your house should enable you to have a down payment for your second house. Obviously, the housing crash changed this for many people, but if you purchased well before the bubble or after the crash, this is how it should work.
3. Finding a Second House Is Harder Than Finding a First House
Most first-time homebuyers don't know exactly what they want in a home. I didn't care if the house had a two-car garage, was in a good school district, or had a fireplace; there were only a few must-have items on my house checklist.
The criteria for my second house, however, was exhaustive.
After four years of homeownership I knew what projects I was willing to take on to improve a house, what features are costly to install, and what qualities were absolute musts. With such an extensive list, I was far pickier about the houses I looked at. It required a lot more work and took a lot more time to find our second house than it did the first. (However, because I knew exactly what I wanted, I looked at far fewer houses than the first time around.)
4. You'll Remember a Lot About the Home Buying Process...
Buying a second home is, in a way, easier than buying your first home because you've already been through the process once. When I bought my first house there was a lot I had to learn. I didn't know anything about finding a realtor, getting a mortgage, or attending a closing. All of these processes were brand new and required a lot of mental energy. When the second time came around, I already had at least a basic understanding of what to do next. This made the process less stressful and gave me more time to focus on other things.
5. ...But You Won't Remember Everything
As much as I did remember about buying a home, I certainly didn't remember everything. There are a lot of details that require re-learning (and a fair number of things can change in the real estate and mortgage world in just a few years). So, the realtor you use for your second house is just as important as your realtor was in buying your first home, because you'll still need to be walked through the details of the home buying process. It's critical that you can ask him/her any questions and that there is an open line of communication.
Have you recently taken stock and considered where you are in your housing process? If you've already purchased a home, what have you learned along the way?