YOUR DREAM HOME

While many people dream of owning a vacation home, oftentimes it is looked at as a luxury available solely to the wealthy. That's a perception that is largely true, as approval for second home mortgages is more difficult than for primary home mortgages. Also, higher down payments on second homes are typically required, as lenders look to protect themselves from borrowers who might be more prone to missing a payment on their vacation home than their primary residence.

Still, for those in the position to afford and be approved for a second home, the decision on whether or not to do so is no slam dunk. Rather, the following financial considerations should be taken into account before you go second home hunting.

· Costs. Even though you won't be living in the house the entire year, the traditional costs that apply to your primary residence will still be there. Financing fees, utility bills and property taxes, among other things, will all still apply. In addition, for those looking to rent out their second home during periods of time they know they won't be using it, that can potentially prove more limiting financially. Oftentimes, renting the property out means you're no longer eligible for certain tax exemptions.

· Compare and contrast. While it's always nicer to own your own place, is it really worth it for you? This can be determined with a simple examination of past vacation's receipts. How much do you typically shell out in hotel or rental fees or other traditional vacation expenses such as food and beverages? If a second home makes financial sense in that regard, then you might be making the right decision getting a second home. However, for those who typically don't spend too much time on vacation or would prefer to travel to different locales, then a second home might not be for you.

· Look at different properties available. Just because you can afford a second home doesn't mean you need one. Less expensive condos or timeshares can make you feel just as at home on a vacation and might be able to save you substantial amounts on property taxes, fees, etc.

· Speak to an investment professional. If you're not currently in a position to afford a second home but would like to be someday, consult a financial planner or advisor and tell him about your goals. If you stay disciplined and start far enough in advance, you should be able to establish a plan where a second home is less a dream and more a reality.

· Know the tax laws. As mentioned earlier, your intentions with property can greatly affect the amount you'll be taxed or allowed to deduct. Don't let these laws be a surprise after you've bought your second home. Know exactly what you can and can't do with your property and how certain things like renting out the property will affect your tax situation. Consula tax professional to learnabout the various tax implications that could make or break you financially.

· Is it what you really want? For vacationers who enjoy time off in the summer and the winter, perhaps a second home isn't the best route, as you likely won't be able to ski and surf in the same locale, meaning you'll still be spending additional money on hotels and other services that a second home should negate. Also, the burdens of meeting the bills that come with a second home can limit your ability to take that second vacation. Understand all the costs you'll have to face once you sign the dotted line.

· Benefits of a second home. There are advantages to owning a vacation or second home. Firstly, you'll build equity on the home for each year you own it, provided the real estate market remains as prosperous as it is currently. Secondly, knowing that your vacation home is equipped with your favorite foods, clothing and recreational items makes embarking on a vacation that much more pleasurable - there are fewer bags to pack, etc. Thirdly, there's always the option of selling your main residence and renting close to where you work through the duration of your career. Then you can focus on making your vacation home a retirement retreat.

FUN SITES:

If you're buying or selling real estate, you owe it to yourself to click here!

About to Purchase a New Home? Up
to 4 free quotes now! (Click Here)

Until Next Time!
Jasmine

http://pickamortgage.blogspot.com

# posted by Jasmine MacDonald : 11:44 AM