I have had a couple calls recently from clients that are thinking about buying a vacation home.  Maybe it's a good time to think about that!  Interest rates are great, so that may make it more affordable.  Home prices are increasing but you may be able to get a good buy this time of year!  

For some people, vacations mean traveling all over the place, for others, it's a trip up north or to a certain area every year.  For those people, it may make more sense to buy their own home and have a place to go whenever they want.  There are more responsibilities- you need to take care of a second home, utilities, taxes, maintenance – but for some, that doesn't matter.  Maybe you have a favorite lake – a home on that lake may be a perfect spot for a second home.  You may be able to rent out the home at times to help offset the cost. You may also be able to write off the mortgage interest on your taxes, that can also help offset your costs.

So how do you qualify for the second home? Truly, the same way you qualify for a regular mortgage – you need to make sure you have the income to qualify, just like your primary residence.  You will also need money for the down payment.  On a primary residence, you can buy a home with as little as 3% down, for a second home you will need at least 10% down.  If you are going to rent out the home, it becomes an investment property and you will need at least 20% down. But as an investment property, you may be able to use the potential rent as income to help qualify for the home.

Where does the money come from for the down payment?  Many people may have saved money to use for the down payment. Others will take equity from their primary residence to use for the down payment. Either one will work as long as you qualify for the total payments. Maybe you have enough equity in your home to pay for the 2nd home, that will help cut the cost of a new mortgage on the second home.

For those thinking about a vacation spot, this may be a great time to buy.  Rates are still low, home prices are on the rise, but with winter around the corner, you may be able to get a great buy on a home.  Make sure you have taken all the expenses into consideration. Remember it's not just the house payment but taking care of the vacation home. It can be a great asset to your real estate portfolio – talk to your loan officer and maybe your financial planner to see what makes the most sense for you! If you decide to buy, enjoy your new vacation home!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, Inc, AnEqual Housing Lender, NMLS#150953 - Email - Website

About Leslie Vanderwerf

Currently a Branch Manager for American Mortgage and Equity Consultants, Inc., it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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