Should I finance or pay cash for a second home?

Should I finance or pay cash for a second home?
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I’m 64 years old and have a $30,000 pension. I also have $760,000 in a vested 401k and $120,000 in an IRA. I want to diversify into real estate where I can swim, fish, and catch some rays. I have no need for distributions from either account. Since I am not taking distributions my income seems artificially low. I could pay cash for a $350,000 2nd home. Should I finance or pay cash? How do I prequalify for a mortgage in the Bahamas?


It would be short sighted of me to give you an answer without knowing your expenses relative to your disposable income. This would be an excellent time to create a financial plan to make sure a 2nd home makes sense and that you will have enough money to last you through your retirement.
It is not likely that you will find a domestic lender to qualify you for a overseas real estate purchase. The reason for this is a domestic lender does not have the ability to foreclose on the property in the case of default. This means you will have to consider a financing option in the Bahamas. If you are dealing with a sophisticated real estate broker they should be able to guide you.
Before you jump in the water, I would consider renting a property for one or two years. Using VRBO or Airbnb you could even try various properties on different islands. You may find renting is more enjoyable with less headaches.


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