Before You Buy

Is a Vacation Home Right For You?

So, you’ve been dreaming about buying that house on the water.  Before you take the leap into second-home ownership, here are some things to consider:

 

Can You Afford It?

A second home mortgage costs between one half to one percent more than a primary mortgage.   Mortgage lenders will often want to see a FICO score of 700 or more to consider lending money for a second home.

Don’t forget, having a second home means twice the bills.  Can you handle two sets of utilities, insurance and other extras? 

If the waterfront home is empty, you’ll be buying furniture and other home goods to fill it up.

And don’t forget, you’ll want to have some fun at your waterfront home.  Can you afford the boat, insurance, license fees?  Not to mention, the gas, repairs and the fun water toys!

Is the Location Reasonable?

Some of our friends have vacation homes that are 8 to 10 hours away from their primary residence.  They visit these homes for extended weekends or two weeks at a time.  Consider the location—is it within a reasonable driving distance for a weekend getaway?  What is the traffic situation like?  Is the location easy or difficult to get to?  How will you access the second home if you plan to use it during the winter/snow months?

Do You Like to Vacation in the Same Place?

You may find yourself in a situation where the majority of your discretionary money goes towards the second mortgage and the living expenses that go with it.   Make sure you will enjoy this location as you’ll be visiting it over and over as long as you own it.

Do You Like to Entertain?

Here’s the thing, when you own a vacation home in a prime location, you suddenly have friends and relatives coming out of the woodwork, hoping for an invitation to spend the week or weekend at your second home.   So consider whether or not you like to entertain your newfound friends on a regular basis.  It’s either that, or a steely resolve to say, “No, sorry, we aren’t taking any visitors at this time.  Perhaps in five years.”