The first step in buying a vacation home is knowing exactly where you want to spend your time and purchase your second home. Considerations when Looking to Buy a Vacation Home: Location, Location, Location can help you figure out where that might be. It's more than just a place you love.
So you have decide where you want to buy, the next step is understanding the financial implications and commitment.
What are the financial requirements?
Even if you decide to rent out your second home as a vacation rental there will be months where you will have to make up the difference financially. Can you afford to carry two mortgages, maintain two households, and pay the extra utilities and maintenance costs? Management fees? You will also want to make sure you have money in reserve for bigger capital expenses, like a new roof.
What are the financing requirements and options?
Financing a second home can differ from a mortgage on a primary residence. Many lenders require a higher down payment and may have a higher interest rate for a second home. Contact a mortgage broker who can look at your particular situation and guide you. Also, make sure you understand the tax implications; can you write off the mortgage interest, expenses, etc.? Talk to your tax preparer and verify how you could be impacted.
Do you want to rent out your second home as a vacation rental?
If so, factor in management and cleaning fees between renters. Confirm the home you purchase does not have any limitations to rent it out. Some Home Owner Associations will not allow a home to be a vacation rental and many cities will impose an additional tax. Once again, you'll want to ask your tax preparer if there are any financial repercussions in your situation.
A vacation home can be a dream realized or a nightmare unrealized. Prepare yourself and know how owning a second home will affect you, your family and your budget. Do your homework, contact mortgage brokers and Realtors as they can be your most valuable resource. Your local Coldwell Banker Hubbell BriarWood agent can help with any out-of-the-area needs!