If you’re tired of paying high vacation rental prices, you can consider buying a vacation home. The demand for vacation homes remains steady despite the slow housing market. Though the reasons to buy a vacation home may vary, now may be the right time to buy one.    

However, there’s much more to owning a vacation home than just fun. Here’s what to keep an eye out for when buying your first-ever vacation home.

Decide the Best Suitable Time to Buy a Vacation Home

Before purchasing, think about your long-term plans and assess your goals. You need to determine whether you need a vacation home as an investment or for enjoyment. Research the market conditions, evaluate your finances and opt for areas with steady appreciation rates.

Consider your Financing Options

A second home purchase is somewhat similar to a primary home purchase. According to realtors, putting 20% down or more is common when buying a second home helps avoid the expense of mortgage insurance.

When exploring your financing options, consult with a local lender in the area because knowledge of the market can prevent problems in the future. Moreover, stricter guidelines may be involved to qualify for a mortgage for an investment property. So the borrowers typically pay a higher interest rate.

Discover the Tax Ins and Outs

Robust tax planning will make a difference in your property return. Since tax implications for vacation homes can vary based on your financial situation, remember the following factors to determine the impact on your taxes:

• Consider property taxes, homeowners’ association fees, utilities, and other expenses.
• The interest on your vacation home mortgage is tax-deductible, while rental properties are liable to additional tax breaks.
• If you rent out the property for 15 days or more a year, you must report all rental receipts to the IRS as income. However, you can deduct operating expenses such as management fees and repairs against that income.

When planning to purchase a second home as a vacation property or an investment, consult with professional mortgage brokers who can guide you through the process. At CMS Mortgage Solutions, our professionals specialize in a diverse variety of mortgage solutions, refinancing options, and loans for first-time homebuyers in Virginia.

They provide a hassle-free process for property purchasing to ensure 100% customer satisfaction. For more information, get in touch with our representatives via our website.