How Do I Buy a Second Home or Vacation Home in Huntington Beach?

How do you buy a second home or vacation home in Huntington Beach? You follow the same basic path as any purchase, with a different kind of loan, a different tax picture, and a closer look at coastal factors.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. I suggest starting with the lender, because the loan rules shape the rest.

This article is general information, not lending or tax advice. Please talk with your lender and your CPA about your own plans.

Most second-home buyers who finance use a conventional loan. Fannie Mae's Selling Guide sets out what counts as a second home. Among its requirements:

• You occupy it for some portion of the year.
• It's a one-unit home, suitable for year-round living.
• You have exclusive control over the property.
• It isn't a timeshare, and no management company controls who stays there.

Fannie Mae's pricing matrix also lists separate loan-level price adjustments for second homes. In plain terms, the rate or fees on a second-home loan can differ from a loan on your main home. Ask your lender to quote the second-home pricing before you shop, along with the down payment they'll require.

Your lender will also look at both housing payments when figuring your debt-to-income ratio. My article on debt-to-income explains how that math works.

When you buy, the home is reassessed. The Orange County Treasurer-Tax Collector explains that new owners usually receive a supplemental tax bill, and that mortgage companies don't usually pay supplemental bills, even with an impound account.

The Homeowners' Exemption won't apply. The Orange County Assessor says it's only for the home that's your principal residence on January 1, and you can't claim it on more than one property. Keep the exemption on your main home.

My article on how property taxes are set when you buy walks through the full picture.

Huntington Beach sits on the coast, and parts of the city are in mapped flood zones. The City of Huntington Beach's flood information page explains how to look up flood zone details. If the home is in a high-risk zone and you have a federally backed loan, your lender will likely require flood insurance. My article on flood insurance in Huntington Beach covers the details.

Part of the city is also in the California Coastal Zone. The California Coastal Commission explains that local governments carry out coastal rules through a Local Coastal Program. If you're thinking about remodeling or adding on later, my article on buying in the coastal zone explains what to ask.

Homeowners insurance can take longer to place on some properties, so get quotes early in escrow. My articles on shopping for homeowners insurance and the California FAIR Plan can help.

IRS Publication 936 explains that a second home can count as a qualified home for the mortgage interest deduction, with a combined limit on the debt for your main and second home. Publication 936 also says points paid on a loan secured by a second home generally can't be fully deducted in the year you pay them. Your CPA can tell you how this applies to you.

1. Talk to a lender first. Get pre-approved specifically for a second-home loan.
2. Set a total budget. Include both homes' payments, taxes, insurance, HOA dues and upkeep.
3. Decide on the kind of home. A condo near the beach and a single-family home inland come with different costs and HOA rules.
4. Look at the property's details. Check the flood zone, insurance quotes, HOA documents and permits for that specific home.
5. Write the offer and close. The contract, contingencies and escrow work the same way they do for a main home.

If you've been thinking about a second home in Huntington Beach, I'd love to hear what you have in mind and help you build a plan. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.