The ABCs of Getting a Mortgage Loan for First-Timers

Posted on: 21 July 2021

Vacations allow you to take time away from your everyday stressful life and relax in a location where you can get in some leisure activities. If you choose to buy a second home as a vacation home, you can use it all year long whenever you are able to get away from town. The following provides you with some helpful tips and recommendations for purchasing your second home.

Evaluate Your Home's Equity

As you are looking to finance a second home, one of the main expenses in the process is the actual home's purchase. Buying a second home can require you to have a large down payment so you only finance a portion of it, or you can also look at your home's existing equity to help you out. In today's market home, values have been increasing greatly in many areas of the country, so if you own a home that has appreciated quite a bit, there is equity there that you can borrow against. 

Look at applying for a home equity loan to borrow against your home's equity, which you can then put into buying your second home. Use your home equity along with any savings you have put aside for its purchase can reduce the chance of you having to apply for a second mortgage to complete the purchase. 

Calculate Rental Potential

Another consideration when you are buying a second home for a vacation destination is the potential to rent out the home to guests while you are not using the property. There are going to be times when your new vacation home sits vacant. And while it is vacant, it can be at risk of vandalism and damage or also the chance of pests problems inside the home. So you will want to hire a property management company to at least look after the property while you are not using it. The property management can also oversee the rental of the property in addition to upkeeping its maintenance. 

This is an exceptional option, especially when your vacation home is in a great vacation location, such as in a tropical destination, on oceanfront property, or in a mountain ski resort area, as examples. The rent you can get from its rental activity will help you make payments on the mortgage, complete repairs and maintenance throughout the year. Just be sure you let the property management know which dates are blocked out for your personal use and they can rent it out the remainder of the year.

For more information about second homes for sale, contact a local real estate agent near you.