Now more than ever many Americans are heading off on vacation. Are you dreaming of a vacation home in your desired location? Not having to worry about staying in a hotel, renting a house, etc? All you’ll have to decide is when to take your trip since accommodations are already there?
In this article, discover all about things you’ll want to consider before buying a vacation home. Read on to learn all about picking out your perfect home away from home, and ensuring it’s the right decision for you.
Reasons To Buy a Vacation Home
While you might be tempted to buy your vacation home tomorrow, keep in mind that it’s a large financial decision that shouldn’t be taken lightly. If you decide to do a timeshare instead, you can check out dvc financing options to make your Disney dreams come true.
Save Money
The first reason to buy a vacation home is if you vacation often. If you do, this can mean you can save money overall. For example, if you go on vacation for a couple of months each year, your home’s mortgage payments can be similar to how much you pay to rent a place. You’ll be gaining equity over time into your place as well.
Make Money
Also, since it’s your second home you might be able to rent it out and make extra money when you’re not there. If you choose a vacation home in a popular destination, you might find it to be a nice investment.
- Down Payment
Before you settle on that second vacation home keep in mind that you’ll need a down payment for it. Many lenders will get nervous when they realize this is your second home.
Some lenders might require you to have 25% or more as a down payment to ensure that you’ll be able to afford it. Before even beginning to shop, speak with different lenders about your options.
- Location
Consider the location of your second home wisely. First, decide whether you’ll want to be near downtown, the beach, mountains, etc.
Think about what’s most important to you, and what you spend the most time doing. For example, if you go to the beach every day you might want to consider a beachfront property, or one not too far away.
You’ll also want to consider the safety of the area, especially if you have your family going with you. Also, if you’ll be flying, how close to the airport is it?
- Vacation Home Types
When you take your yearly vacation, maybe you want a home that you know is being well taken care of when you’re not there. If so, you might want to consider homes with HOAs. Take a look at what’s covered to decide if this is the right fit for you.
If you decide you’ll want to host many parties you might not want a condo with limited parking. Or, if it’s just you and your spouse you might not need that 5 bedroom home.
Keep in mind that homes with HOA fees tend to have different amenities such as tennis, community pools, etc. You and your family can enjoy the community pool without having to worry about keeping it up.
- When Would You Go?
Think about when you’ll want to go to your vacation home. Keep in mind that if you’ve only been in the summer, it can be quite different in the wintertime.
If you decide to go during the popular seasons, that might mean a loss in rental income. For example, going skiing in Denver in the winter is a popular time.
- Can You Still Meet Your Financial Goals?
There are different financial factors you’ll want to consider such as weddings, college, and retirement. If you decide to go with a second home will you be able to still meet your different financial goals? While you might be quick to buy a second home and not think about these different goals, you might be shocked to realize it’ll put a damper on these dreams.
Potential Cons
While you might think owning a vacation home is peachy, there are cons as well. For example, they’re expensive.
If you decide you want a beachfront property, the price tag is normally a hefty amount. You might be able to buy a vacation home 10 minutes away, but then you’ll have to worry about driving and lugging everything you want to bring.
In addition to paying the mortgage, you’ll need to pay for insurance, utilities, and property taxes just like your first home. Any maintenance issues that arise will be your responsibility. If your vacation home is far away you might need to consider having someone check on it to ensure everything is running smoothly.
Keep in mind that if you buy it you’ll want to be in it for at least five years. This is to ensure that you don’t suffer a loss from selling your home.
Do You Get Tax Breaks?
You might be able to subtract your property taxes and mortgage insurance from your vacation home. Consider it similar to your main house. This also depends on how much you rent out your vacation home for.
Things To Consider When Buying a Vacation Home
Now that you’ve explored the different things to consider when buying a vacation home, you should have a better idea if it’s right for you. Would you like to read more travel content? For everything from budget travel to destinations, check out our other articles today.