Enjoyed your summer vacation? Thinking of investing in your local hotspot, but wondering if it is a wise choice? There are ways to comfortably afford the vacation home of your dreams while making smart financial choices. A vacation home can be a very wise investment when the proper financing methods are utilized.
Here are a few tips and strategies:
- If you have multiple location choices, make sure you are working with a Real Estate Professional who is a specialist in the location you want to purchase in. Also, make sure you are working with a Certified Mortgage Advisor who has experience with Investment and vaction homes:
- From an investment perspective:
- Which area is likely to appreciate more in value over the next several years?
- Which area is more likely to enable you to rent out the home when you are not using it (if you desire to do so)?
- From a lifestyle perspective:
- Which area provides more amenities and lifestyle benefits?
- Which area is a better value in terms of living space and upgrades?
- From an investment perspective:
- If you plan on renting out the home when you are not utilizing it for personal use, make sure you are working with a professional to help you evaluate the cash flow implications. Additionally, by working as a team with your CPA, Mortgage Advisor and Real Estate professional they can help you determine the tax consequences of your decisions.
- Know your credit score! You may be able to get a better mortgage rate and more favorable loan terms by restructuring some of your balances on credit cards, car loans, etc. a Mortgage Advisor can help you correct errors on your credit report and determine which balances to restructure or pay off in order to improve your credit score.
- Know how much you can spend and determine how much you can afford. Your Mortgage Advisor can help you:
- Finance your vacation home based on your monthly payment comfort level
- Determine how much cash to use as your down payment and where to get these funds
- Understand your before and after-tax monthly payments
- Restructure some other debt you may have to free up more monthly cash flow that enables you to improve your vacation home buying budget financing
- Determine whether to rent or buy a vacation home based on timeframe, budget and local market conditions. A Mortgage Advisor can help you run the numbers to determine if it is better for you to rent or buy a vacation home based on your individual circumstances.
- Don’t get caught in the “pre-approval” / “pre-qualification” trap. It is always better to get a full approval / loan commitment from a Mortgage Advisor before you even start looking for a vacation home. Many mortgage brokers and lenders will give you a “pre-approval” or “pre-qualification”, but these are often meaningless. What you really need is a bona fide commitment from a mortgage lender that you are in fact approved for financing.
- Don’t be scared by “Housing Bubble” misinformation. For the last four years, the national media has been scaring potential home buyers with continuous chatter about a so-called “housing bubble”. For the last four years, the national media has been wrong. It is always wise to base your decision to buy or not to buy on fact, not emotional hype.
Please feel free to give me a call and I would be happy to help you evaluate your options to purchase your new vacation. home.
Marc Thompson, CMPS
UMAX Mortgage
437 F Street
Davis, CA 95616
Davis, CA 95616
530-753-8800 direct
415-520-0706 fax
mthompson@umaxmortgage.com
