Buying a vacation home can be a great way to bring you closer to your favorite activities like boating and fishing, but you can't go rushing into it without doing your research. Before choosing to commit to your dream vacation home, consider these 5 things to help you make your decision.
Most homeowners forget one crucial part of buying a vacation home—calculating and analyzing their finances. A good place to start is with your monthly expenses, including all non-essentials and basics. Ensure you are precise and don't forget to budget for retirement and savings.
What is left after you subtract the above expenses from your income will determine whether you can cover a second mortgage. Because large vacation homes can be expensive, you can always go for smaller vacation homes that fit within your budget.
What are you expecting from your vacation home? Are you looking for a busy section of town with nice restaurants and superb nightlife? Or do you need a quiet place with few neighbors, thus prioritizing your privacy?
Because the location is a vital factor in buying a vacation home, ensure you visit the place. What you need is a property that you will love visiting. If your home is currently located near an ocean, an excellent option to consider might be a big city condo or mountain top cabin.
Vacation homes will include additional costs like repairs, maintenance, utilities, and other charges. Furthermore, the expenses will skyrocket when you want to transform the home into a rental. You will have to deal with property management fees, cleaning fees, home maintenance, and increased insurance premiums.
For starters, vacation rentals are more expensive to run than traditional rentals. When people are constantly shifting in and out of your place, the wear and tear are usually significant. You have to factor in additional costs when you decide to rent your vacation home.
You have to pay taxes on vacation homes, just like any other property. It will help if you prepare yourself in advance. Review everything with your real estate agent or mortgage specialist to know what is expected in property taxes.
Secondly, consult with an accounting specialist to figure out any other underlying tax issues. For example, learn what happens if you decide to sell the vacation home.
Banking institutions will expect you to have a strong credit score if you want to take on two mortgages. For starters, a credit score of below 700 might not get you the second home you need. Luckily, you can always fix your credit rating.
Speak to a financial professional or accountant to help you raise your credit score. Make efforts to improve the rating before applying for a second loan from the bank. Having a good credit score always comes in handy when buying a vacation home.
Buying a second/vacation home is easier when you find the best mortgage to finance the purchase. At Lend Smart Mortgage, we can help you close the deal by simplifying the mortgage process. Ensure you contact us today to get started buying your dream vacation home.
We are a direct lender and a broker who will work one on one with you to exceed your expectations. If we don’t have a product that makes the most sense for you, we’ll find the lender that does. We’ll make sure you have the best loan at the best price. Choose Lend Smart- it’s the smarter way of doing business.