What to Look for When Buying a Vacation Home

by Phillip Presley Student

A vacation home is a luxury not many Americans can afford. However, if you’re one of the lucky few, there are certain things to consider before making the purchase. Check out this article to find out more.

Some people view vacation homes as a relaxing oasis to spend their holidays, while others look at them as investments. You can lease them to generate supplemental income or even sell them after a few years, hopefully gaining a profit. Either way, a second home is a major purchase. You have to assess your financial situation carefully in order to determine if you can afford it, and settle on an accessible location. Here are some tips that will help.

Decide if it’s the Right Time to Buy

Only you know if you are financially stable enough to afford such a large purchase. You have to consider the market conditions and your personal finances in order to assess where you stand. Also, keep in mind that mortgage lenders have stiffer requirements for people looking for second home financing. You will likely be required to put down a larger down payment – more than the recommended 20-percent set for primary residences. You also need a pristine credit score, definitely higher than 700.

If you are looking to finance your purchase through a loan, don’t bank on renting the property right away to cover your monthly payments. You never know what the future holds, so you need a contingency plan in case you aren’t able to find any renters. Make sure you’ll be able to afford those payments on your current income.

Settle on a Location

Aside from the cost of the home, look at it from a practical point of view. We would all love to own a Caribbean beach house, but how often do you actually visit the Caribbean? If you are only going to use the home once a year, it may not be worth the investment.

Look for something closer to your current home. For instance, if you live in Boston, Quechee Lakes (http://www.quecheelakes.com) is a great option for people looking to buy a second property. If you live in Washington, Cape May (www.capemay.com) may be your best bet.

Research The Area

When assessing the location, renting for at least one stay is always a good first step, especially if you are unfamiliar with the area. You should also get to know the place from a local perspective by talking to current residents and asking for their advice. During your stay, scope out restaurants, grocery stores and entertainment options. You have to make sure the area is the best fit before you decide to make a purchase.

There's something irresistible about the idea of owning a vacation home. Whether you’re looking for a place by a beach, lake, or in the mountains, consider the tips above before starting to shop – they’ll bring you one step closer to making your dream come true.