Many Americans have the dream of having a home away from home. Last year, thanks to the aging baby boomers and tax code changes, second home sales made up almost a quarter of the residential real estate market.
The big question you might be asking is “How can I afford a second home?”
With a pocket full of cash equity, many are selling their larger homes and purchasing a smaller home and a vacation house or investing in rental property. In 2004, almost 1/3 of residential property buyers who financed were using money from the sale of a primary residence, according to a survey by the National Association of Realtors.
Following are some tips for financing a second home:
- Identify your primary goal. Why do you want a second home?
- Apply for financing in the town where you are looking to buy. Bankers may give better terms because of the market.
- Caution: You will be paying two of everything! Budget wisely!
- Don’t hurt yourself financially. Remember the reason you are purchasing a second home is for relaxation. You do not need money troubles to stress you out.
- Carefully check out Internet loan sites.
Many people will purchase a vacation home together with family or friends. A big issue here would be the availability of the house. There are many ways to divide the time up, so don’t let that be a big influence on whether to purchase your dream home. The important thing is to make sure you put everything on paper. Make contracts to cover the finances, maintenance and even how the house will be shared. Set up a calendar and mark everyone’s vacation time down, therefore you won’t have surprise visitors.
With a little extra planning, your dream of a home away from home can become reality!
