What does the perfect vacation home look like to you . . .
A dock on a lake. Just off the ski trails. An “urban cabin” in the heart of the metro just steps from entertainment and eateries.
People choose vacation homes for a variety of reasons. For some, it’s simply a place to get away. Others intend on making a vacation home their future residence or retirement home. Others, still, consider a vacation home an investment to rent throughout the year.
Regardless of your reasons for wanting a vacation home, you’ll want to consider the following tips.
Keep it close to home. Most people choose a vacation home within one to three hours of their primary residence. That way, it still feels like getting away while not being a daunting drive that discourages going there often.
Visit the area first. If you have an ideal location in mind, spend some time there. Get out and about and talk to the locals. Learn what the area is like from a resident perspective.
Feel the off-season vibe. If you choose a vacation home for its seasonal climate or recreation, you may want to get a handle on what the area is like in the off-season. Can you physically access the home year round? Can you use the home year round? Are local amenities available year round?
Know your personal finances. Your total debt payments, including all mortgages, cannot exceed 36% of your gross income.
Understand full cost of ownership. When considering vacation home expenses, think about more than just the mortgage loan. Additional expenses may include taxes, insurance, association fees, utilities and upkeep (like paying someone to mow the lawn if you’re not there all the time).
Learn about tax implications, especially if you are planning to rent the property out. Typically, interest on a second home mortgage is tax deductible. You may qualify for additional tax benefits, as well, based on using the home as a rental.
If you’re looking for a vacation home, give us a call to talk about loan options. A home equity loan is the most popular form of financing, but we can determine what’s right for you.