Have you considered purchasing a second home? Financing may be easier than you think.
Vacation Home vs. Investment Property
If a second home is even a consideration– we’re here to help you understand how it can be attainable.
Some second homes are used as vacation homes, others as an investment property, and some serve as both.
Keep in mind that lenders have stricter criteria for investment properties than for vacation homes. Loans for investment properties have higher down payment requirements and higher credit score minimums.
According to Bankrate, the amount of time you’ll personally use the property determines if it is an investment property or a second home. The Bankrate article states, “if you use the property for more than 14 days or more than 10 percent of the time it’s rented, any rental income you receive isn’t taxable — but you also can’t deduct expenses.”
Costs of a Second Home
Whether a second home would be used for vacation or for investment income, either way it is important to look beyond the list price and monthly mortgage payments when budgeting for the true cost of the second property.
Generally, second homes, as compared to primary residences, require larger down payments, higher credit score requirements and higher interest rates.
Remember to include the following line items in your budget:
- homeowners insurance
- property taxes
- utilities
- HOA dues
- maintenance/ upkeep
- home furnishings and essentials
Co-Ownership
Starting to have second thoughts? Here’s another idea to consider, from Inman, co-ownership. “Co-ownership enables multiple individuals to purchase property together and share usage rights. Because each party is only responsible for a portion of the full purchase price, co-ownership can be a practical way to purchase and own an asset like a vacation home that might be too expensive on your own.”
Loan Options
There are multiple loan options for a second home. Below is a list of loan options with links to their descriptions from our trusted partners, Movement Mortgage.
- Conventional Mortgage Loan
- Home Equity Line of Credit (HELOC)
- Home Equity Loan
- Cash-Out Refinance
- Cash, always a nice option, if available.
Fluid Realty
The Fluid Realty Team is Jacksonville’s top real estate group and local boutique brokerage. We provide a full-service experience with the best realtors in the area. Our expertise includes luxury beach real estate within the four Beaches of Jacksonville, FL: Atlantic Beach, Neptune Beach, Jacksonville Beach, and Ponte Vedra Beach.
