During the pandemic, many professionals started working from home as the norm. Suddenly, buying a vacation home became much more appealing, if you were able. That way, you could have a couple of different places to work from, while remaining socially distant and healthy.
Of course, buying a vacation home is still desirable, even if you don’t work remotely. Maybe there is a particular part of the country you visit more than others. How much do you think you spend on hotels? Wouldn’t it be great to already have a home in that location? It would always be there when you needed it – whenever that may be.
If in the future, you’re planning on buying a vacation home – or in the market for one now – to make it a more seamless process, here are some tips.
Work with a Realtor Who Is Local
Whether you vacationed in an area for years or are new to it, buying real estate in that area could be difficult without local assistance. A professional real estate specialist with local experience will be familiar with local restrictions, regulations, and available properties that fit your search.
Compare Mortgage Rates for Vacation Homes
Compared to your primary residence mortgage, you’ll find a typically higher mortgage rate for a vacation home. Think 1% extra, 0.5% extra… It may vary. To locate the best home mortgage terms and rates for a second property, do your homework.
Know the Requirements for a Loan
Do some research in the following areas:
- Are reserves required for purchase?
- What percentage will you need for a down payment?
- How’s your credit score?
- Might you be able to take advantage of a debt-to-income ratio?
Different requirements apply to various types of loans. Be sure that, with different lenders, you check the requirements specifically for a vacation home mortgage.
Know How You’ll Afford Vacation Home Financing
Examine your financing options once you find a lender. Keep in mind that additional debt won’t be tacked on if you pay off the property – or make payments with – your savings.
Not all loans are used on all types of homes. For example, VA and FHA financing don’t apply to a vacation home.
Use a Lender Who’s Local
When looking for a lender, try to go with someone who’s located in the same area as your vacation property and who specializes in second-home mortgages. For the area in which you’re buying, a person such as this would already understand required specifics and rules, as well as have ready local financing sources.
Seriously Examine Your Budget
This is the time to think as realistically as possible. You must have a complete understanding of the costs you may incur before you purchase a vacation home.
Naturally, you’ll expect expenses related to mortgages such as insurance and taxes, interest, and principal. But there are other expenses above and beyond your mortgage payment every month you’ll need to be aware of – particularly if you’re going to rent the home out when you’re not there. Generally included are the following expenses:
- Housewares and furniture
- If you rent it out, vacancies and management
- Repairs and maintenance
Decide on Vacation Home Usage
Eventually, you may want to count the vacation home as your primary residence. You may even end up selling your current residence and opting to move to your vacation property exclusively.
If you’re going to consider the new “vacation home” as your primary residence, this will have a direct effect on the mortgage process and rates.
To secure a loan for a vacation property, you’ll need a little bit more than if you would consider it your primary home. But having a vacation home is highly desirable.
If an investment property is more what you’re thinking of (it’s either in addition to or instead of a vacation home), the down payment and your loan interest will probably be even higher. But you’re going to have monthly rental income (when you’re not staying in the vacation home yourself) to help you pay off that mortgage.
Note:
Serious preparation and thought are required whenever you’re considering the purchase of a vacation home. For some advice and assistance, here is a suggestion…
Confer with NJLux Real Estate About a Vacation Home in Bergen County
My name is Joshua M Baris. I’d like to help you find your new vacation home. I deal in luxury real estate New Jersey listings. I can introduce you to the finest Bergen Country luxury homes in the area. Of all licensed-in-New Jersey real estate agents, you’ll find me ranked in the top 1% thanks to my excellent marketing techniques and more.
Let’s talk about real estate! There are numerous ways to get in touch. Call me at 201-771-1969 or email me at josh@njlux.com. You can FB message me at m.me/njlux or, if you choose, open the lines of communication by using my website’s convenient online form.
