Purchase your Vacation HomeFeb 28, 2023 ● By Dawn Van Nieuwenhuyzen — Senior Mortgage Banker
By: DVN Mortgage
March Madness is upon us! I’m not talking about basketball, though there is that too. I’m talking about that crazy itch we’re all experiencing to get out of South Dakota and into some sunshine. I think it’s safe to say that around this time of year, we’re all dreaming of warm days at the lake or sitting oceanside as a salty breeze blows through the air. You may even find yourself daydreaming about that perfect escape. But why daydream when you could make it a reality? Owning a vacation home isn’t as far-fetched as you may think.
If you’ve ever wondered what it takes to own a vacation home, I’m here to help. As always, you can give me call to schedule a time to meet in person and talk through your specific scenario. In the meantime, here’s some things to think about.
First, you need to decide if you are buying a second home or a rental property. Figuring out how much time you’ll spend in the home yourself versus renting it out determines what kind of mortgage you can get. To most lenders, a property is considered a second home if you occupy it for some part of the year, it is suitable for year-round living, and is a one-unit dwelling. It also can’t be a part of a timeshare or property management agreement. However, if you plan to rent your second home for most of the year, it will likely fall under the category of an investment property. An investment property loan can be a bit trickier with higher interest rates and stricter guidelines, but an experienced lender like myself can help you find a mortgage that works for you!
The second thing you need to obviously think about is whether you can afford a vacation home or not. If you’re hoping to bring in income from renting, it’s vital to recognize this type of revenue is unpredictable. Where one year you may be completely booked, you never know if weather or say a global pandemic might affect you the following year. Being able to handle both payments without always needing the rental income of your vacation home is the wisest way to go.
Once you’ve thought through these two things, it’s time to meet with me- your mortgage banker! Before you start shopping around, let’s get together and get you pre-qualified, that way when you do begin your search for that dream property, you can do so with confidence. My team is here to help make this process smooth, educational, and even enjoyable. A meeting to talk through your opportunities and financial goals is completely free, so give us a call and let’s get a time scheduled.
After we have you pre-approved, it’s time to find that perfect place. You can do this on your own, but an experienced realtor will help put power in your corner. If you need a realtor who you can trust, my team can also help you out. A good rule of thumb when searching for a vacation home is to look no further than three hours away- that is if you plan to head there for weekend getaways. If you’ll use it more as a summer home or winter retreat, finding something further works just fine. Think about the things you love, the experiences you enjoy, and what your idea of rest and refreshment looks like. Is it being near the beach, lake, hiking trails, or shopping? Maybe you dream of being close to that quaint town you love stopping in for great coffee and beautiful views. It’s wise to buy in a place you know you already enjoy and love.
Give me a call and we’ll get you started today. Can’t wait to make your dreams a reality.
Dawn Van Nieuwenhuyzen — Senior Mortgage Banker – NMLS #21096 – Plains Commerce Bank — (605) 271-9754 Loans subject to credit approval. This is intended for informational purposes only. Always consult with a tax professional. Member FDIC. Equal Housing Lender.