Have you always dreamed of owning a vacation home? It’s not a decision to be taken lightly, but if it is something you’ve always wanted, the process for making that dream come true is not as difficult as you might think.
Where Do You Want to Be?
First, consider where you want to purchase a vacation home. Unless you’re planning to rent the home out full time, you’ll likely vacation there from time to time – so find a place you enjoy! With that said, if you are planning to supplement the mortgage payments by renting it out from time to time, it’s a good idea to choose a destination that’s also popular with tourists.
Can You Afford a Second Home?
If you think a vacation home is out of reach financially, you may be surprised to find that you’re capable of owning another home along with your primary residence. Even if you don’t have the ability to pay in full, there are several financing options that give you the flexibility to take out a mortgage on a second home.
Conventional Financing
Financing a second home is similar to purchasing a primary home. Although some of the low-down payment programs are not available, putting down little as 10% down can help you get started on purchasing your vacation home.
“Cash Out” Financing
Are you thinking about a cabin in the woods, a summer cottage, ski or golf course condos? Unique properties may have appeal, yet they may also need non-conventional financing. If you can, refinancing your primary home can be a smart solution so you can use the equity for your vacation home.
Rental Income
Owning a rental property is a great way to bring in extra income. If you do not mind renting to visitors when you are not there, the income can be a great additional subsidy. However, you should not purchase a vacation home if you’re solely dependent on your rental house income because it can fluctuate based on the demand for visitors.
What About Tax Advantages?
Always check with your tax pro, but owning a second home can carry tax advantages that serve to reduce the actual cost of owning. Although appreciation is never guaranteed, over time the value of the home can increase with renovations or changes in the market and these can reward financially in the future.
A vacation home can be a rewarding investment for you to enjoy for years to come — and it can also be passed down many generations within your family. Before purchasing, weigh the pros and cons and determine what you’re seeking in a second home, and when you’re ready, take the plunge! At C&F Mortgage, we’re here for you every step of the way — get in touch today to learn more about the process of buying a vacation home.