Your vacation home could be the stuff of dreams: salty ocean breezes, cool, crisp mountain lakes with the smell of pine wafting through the air, or quiet mornings watching the deer in the meadow near your cabin in the woods. The dream is not out of reach with the right savings and mortgage planning. But before you drop all that cash on your vacation home, especially if you’re a first time home buyer, here are some things you need to know.
- Know exactly where you want to be. This will help you focus on what you really want. What things are a top priority, and what are not? Do you need to be close to restaurants and nightlife? Is having boat access a pleasant addition or an absolute must? Are there any medical issues that mean that you need to be near a hospital? Do you want a vacation home where there’s a community that you can be involved with, or do you prefer a vacation home where you can have quiet and solitude? What time of year do you want to be able to use your vacation home? For most people, this is going to be during the summer. Some people, however what to go to warm places in the winter or to see New England foliage in the fall. Before you start looking, figure out exactly what it is you want.
- Work out a reasonable budget. This is where a lot of people go wrong when buying a vacation home. Your vacation home is more than just the initial cost. You also want to consider taxes, what it will cost to insure the house, what average utility fees run in that area, whether there’re any condo or HOA fees. You’ll also want to consider what it might take to outfit your vacation home so that you can enjoy it. Will you need any kind of seasonal gear, such as lifejackets, jet skis, snow skis, or other items? It’s important to know your budget. Going in prepared increases your chance of being one of those who qualify for va home loans.
- Figure out how you plan to get there. Don’t buy the amazing cabin in the middle of nowhere only to find it’s such a hassle to get to that you want to sell three years later. Will you be able to drive to your vacation home, or will it be necessary to fly and rent a car? Could it even require a ferry to get to your destination? These are all important considerations, because while the vacation home might seem like a very exciting proposition right now, once you have to get there and get back on a regular basis, it may be less enticing. Getting there and back will also be something to factor into the budget.
- Don’t assume you can rent it out, but do check with family. Don’t buy a vacation home you can’t afford assuming that you can rent it when you’re not using it. If you’re planning on buying a vacation home primarily as an investment property, know that this may affect some of your choices for financing and could significantly increase your taxes. You want to discuss all of this with a mortgage broker. However, it doesn’t hurt to check with family to see if anyone else is interested in going in on it with you so the vacation home can be used by the whole crew. Just make sure that you nail down in advance who can use it and when, as well as any house rules you want to apply universally. If you do want to use your vacation home as a rental property, be sure to get a realistic idea of rental rates in that area and consider whether or not you may need a property manager if you are too far away to fix problems that arise.
Your vacation home can be a wonderful investment and a great way of the planning for your future. Just make sure you plan carefully, within your budget, and in consultation with a good mortgage broker.