Where do I start?   return to top

Choosing a buyers agent that you are comfortable with should be your first step. All REALTORS realize that this is an important decision for you and most will not push you to make hasty decisions. Take the time to meet a REALTOR, ask them questions and get familiar with the OBX real estate market. Once you are ready to seriously begin you will want to sign a Buyer Agency Agreement. This means you will have a REALTOR representing you and looking after your best interest during this important time. Your buyers agent will begin by gathering information from you about your goals and plans for the property. You will need to be prepared to speak with a lender to find out how much you can qualify to purchase. At this point your buyers agent will be able to show you a list of properties in that price range. Together you will compare prices, expenses, location and rental histories to determine which property best fits your need.

Is it hard to qualify for a second home mortgage?   return to top

No. Many first time, vacation home buyers are surprised to discover the ease of qualifying for a second home loan. Generally buyers will qualify for more than they believed possible. Sun Realty works with many different mortgage companies, in most cases we can help you find the right property and the right loan package to help you become an OBX property owner. Many OBX real estate closings take place with less than 20% down. Depending on your individual situation, you may not need 20% down to qualify for the loan. Today you can use the income on the property to qualify for the loan. Using the income to qualify would make the loan an investment loan which can carry a higher interest rate. Currently with interest rates at their lowest in years, this slight difference can help first time buyers purchase a much nicer home.

Should I use a lender from my area or an Outer Banks lender?   return to top

Although there are several reasons why it is best to use an Outer Banks mortgage company, the main reason is that Outer Banks lenders are familiar with OBX property. Outer Banks lenders will know more about the area, flood reports, elevation certificates, land surveys and various insurances required to close the sale of the property more efficiently.

What type of expenses can I expect from a rental house?   return to top

If you are purchasing a property that is already constructed and in a rental program your buyers agent, in most cases, will have access to the past years expenses and income from the current owner. You will receive your monthly bills in the mail for your electric, water, cable and phone and you will be responsible for paying them. If your home is managed by Sun Realty Property Management Company, you will receive a monthly direct deposit from the rental proceeds. You will have access to your account information via the internet to help you manage and budget your expenses.

What are some of the tax advantages?   return to top

Every ones tax situation is different. Depending on your income and the amount of time you spend in your second home may affect your ability to take advantage of all of the tax benefits. If your second home is used as a rental cottage (meaning you vacation in the house no more than 14 days per year excluding maintenance time), you may be able to deduct the following expenses: property taxes, mortgage interest, depreciation, insurance, telephone, cable, electric, water, management fees, maintenance, repairs, pool & spa service (if you have one). Everyone’s tax situation is different, your tax advisor will be able to help you take advantage of your own deductions.

How much of a down payment is necessary?   return to top

The answer to this question depends on your financial situation. If it is important that your second home generate a positive cash flow, then you should plan to have a higher down payment. If you can carry $350 – $500 a month extra in your monthly budget then you can probably go with a smaller down payment. Your buyer’s agent will have discussed with you the expenses and the income on the property you are purchasing. You will be able to make an informed decision about how to finance this property based on your own needs and ability. One point to remember, if you are financing more than 80% of the value of a home then the lender may ask for PMI (Prepaid Mortgage Insurance). PMI is not a tax deductible expense and can be quite costly. (as much as $2500 per year on a $350,000 property) Your buyer’s agent should help you avoid PMI. There are several ways. The most common is to request a slightly higher interest rate (.25 – .50) instead of PMI. The benefit is that you can deduct mortgage interest on your loan, but PMI is not tax deductible. There are other means to avoid PMI, your buyer’s agent should help you with this.