Does the thought of a lakeside retreat make you smile? Are you ready for that cabin in the woods? Looking to buy a retreat in another state?
Buying a second home is a great option, and the process is not much different from buying a primary home. However, there are a few things you will want to consider:
If you buy on a whim, you may end up with a second home you can’t afford or that doesn’t fit your needs. Remember what it was like when you purchased your first home – many homebuyers are surprised by all the extra work involved, as well as the extra expenses. Also, consider what your plan is for the home. Do you plan to retire there? Are you sure you’ll be able to afford the expenses along the way?
Be realistic about what type of second home suits your lifestyle. If you’re looking for a weekend getaway, staying within a day’s drive of your primary home could be a good move. If you’d like your second home to someday serve as a retirement spot, assess the home’s accessibility and check out health care services in the area.
Buying a vacation home outside your area can be tricky, as residential real estate is extremely localized. A local agent can help you get to know the market and the area. Your realtor may also be able to recommend resources that can help with maintenance and care of the property.
If you use the place as a second home — rather than renting it out as a business property — interest on the mortgage is deductible, just as interest on the mortgage on your first home is. You can write off 100% of the interest you pay on up to $1.1 million of debt secured by your first and second homes that was used to acquire or improve the properties. Consult your tax advisor.
Your mortgage professional will discuss financing programs and down payment options that can help you meet your goals.