The low tax rates and seaside communities of Delaware have probably led you to buy a second home in the state. As your retirement looms closer, you might wish to make your second home your primary home.
Living in your second house on a regular basis may be just what you want in your older years. As Homelight explains, there are some necessary steps to turn a second home into a primary one.
The costs of refinancing
Banks classify homes according to whether they are primary or secondary homes. A bank considers a primary home to be less of a risk than a secondary residence. If you wish to make your second home a primary one, you may refinance your mortgage and get a lower interest rate.
However, you will have to pay closing costs to refinance your mortgage. The question is whether the resulting lower interest rate will offset the costs of your mortgage modification.
The fate of your primary home
If you sell off your primary home, you could use the profits to pay off the mortgage of your second house. However, keeping your current primary home could cause your bank to reclassify it as a secondary home. Your mortgage interest rates on your old primary house may go up as a result.
Renting your current primary home could generate revenue for you. However, you might have to notify your bank if your old primary residence now looks like an investment property.
Be aware of other considerations
Your home insurance could also change. Insurers consider a secondary or vacation home to be more of a risk. You may get lower rates on your new primary home but higher rates on your current primary residence. Consider your financial situation and future plans before proceeding.