What To Know About Buying a Vacation Home
If you’re like many Americans, your vacation plans have gone belly-up this spring and summer due to the coronavirus pandemic. Honestly, you’d be hard-pressed to find anyone whose 2020 overall is going according to plan. If this current situation has done anything, it has completely redefined what “home” means to millions of people.
Almost overnight our homes became our schools, our offices, and our refuge from uncertainty. And while it’s true that many of us may have suffered some cabin fever, the truth is that the concept of home has changed for the foreseeable future. So, as the paradigm continues to shift and “home” remains the safest place to relax, maybe it’s time to consider purchasing a vacation home.
There are many benefits to owning a vacation home, which become even clearer when you consider the idea through the lens of what you can control. Meaning, you’re in more control of a home you own, and can be confident that you’ve created a safe environment for you and your family. If you’re considering a vacation home, read on as we cover some important things to think through before deciding to make the purchase.
Benefits of a Vacation Home
The biggest benefit of owning a vacation home as it relates to current events is having a safe place to escape to. And a bonus benefit is having a home in an area you absolutely love. Because of work, most of us can’t just live anywhere we want (although that situation is starting to change with a number of companies transitioning to remote work, but we digress…). The point being, if your job requires you to live in the plains of Kansas, but you love to picture yourself residing somewhere in the mountains, then imagine making it a reality to own a home in a mountainous area to get away to on the weekends.
If you are immediately hesitant about the idea because of the potential cost, consider this: one of the biggest benefits of owning a vacation home is the ability to rent it out while you’re not vacationing there. In fact, depending on where your vacation home is located, renting it out is a strategy that could more than pay for the house over time. If you are wondering if owning a short term rental is for you, learn more about what our parent company, Sunflower Bank, has to say on the topic. And while many people have halted their vacation plans this summer, vacation home ownership could still be a smart investment in the long run.
Leverage Your Existing Equity
Obviously, buying a second home is not a realistic option for everyone, but the truth is it is a viable option for more people than they might realize. Now, if you’re in a financial position that allows you to make a sizable down payment on a vacation home, then that’s the ideal situation. But if not, then you still might be able to tap into the equity you have in your existing home to help fund a down payment for your new home. And by the way, mortgage rates are currently at historical lows, so now is a perfect time to seriously consider this route.
Other Things to Consider
There are also a variety of tax benefits* associated with owning a vacation home. If the home is strictly for personal use, you can deduct your mortgage interest and property taxes just like your primary residence. Now, if you’re using the home as a rental property too, the tax situation does get a little more complicated, but there are still breaks to be enjoyed.
When it comes to looking for a property, we’d recommend you work with a local real estate agent versus your normal agent. They’ll have the connections and knowledge to help you better navigate that market than your regular agent.
Also, don’t forget that in order for a property to be considered a “vacation home,” it has to be at least 50 miles from your primary residence.
Last, but certainly not least, you can always choose to build your vacation home – a real benefit of which is being able to pick and choose exactly how your vacation home comes to life. Also, depending on where you’re buying, it’s possible you can purchase a lot and build your home for less cost than that of buying an existing home. This isn’t always the case, but it is possible if you’re not terribly picky on location.
It has almost become a cliché, but it’s definitely true that 2020 has been an unprecedented year. If the events of this year have suspended your vacation plans, then maybe this article has helped you decide if a vacation home is in your future. Now, while we have covered a number of things to consider when purchasing a vacation home, there’s always more to it. That said, a vacation home could be just what the doctor ordered for you and your family. If you’d like to know more about financing options for a second home, our Guardian Mortgage Professionals are always ready to answer any and all of your questions.
*Before making any decisions related to real estate management or financing, you should consult with a qualified tax advisor.