Buying a second home can be both exciting and overwhelming. Many second homebuyers start out on “vacation high” where they fall in love with the place they are enjoying for a few days holiday. Once the decision is made to make the dream a reality, anxiety can set in. The best way to relieve the anxiety is to follow these simple steps.
- Decide how much home you can afford.
As a homeowner, you know there is more to owning a home than just the mortgage. Even if you are paying cash, you need to consider other costs. For a vacation destination these costs may be different than the costs associated with your primary residence. In addition to property taxes, insurance, maintenance, utilities and HOA’s (home owner association dues), there could be other costs based on the location. For example, in a winter location like Mammoth Lakes, California there could be costs for snow removal, heating (propane, firewood, etc).
- Develop your vacation home wish list.
Where do you want to be and what is most important to you? For example, is being in walking distance to shopping and restaurants important or is being able to ski in/ski out more important. Prioritizing your desires in advance is helpful. It is easy to get caught up in the moment when viewing property and keeping addressing your priorities in advance will keep your property search focused.
- Understand the costs of buying in advance.
Communicate with your Realtor in advance your financial situation. In some resort projects traditional financing may not be available and third-party or private lenders may be the only option. This could require a larger down payment or even higher interest rate. In addition, there may be other costs common in the area.
- Be ready to make an offer.
If financing, this includes getting your credit in order and obtaining a prequalification approval. Get a free credit report (you are entitled to one annually from the major credit bureaus) and make sure the information is accurate. Your Realtor can recommend local lenders that have experience lending in the resort community. Talk with the lender to get a prequalification letter and understand your loan options. If paying cash, make sure you have “proof of funds” documentation to support your “all cash” offer.
A qualified Realtor can help you follow these steps and make the process flow smoothly.