If a Beach Home is Calling You…

If you’ve dreamed of a second home by the beach, today’s market presents a great opportunity. With down payments as low as 10% on second homes, you may be able to turn those dreams into reality. Imagine the memories that you will share for generations as you spend time away from it all at your home away from home.

Funds. Consider the funds you’ll need beyond the down payment. The lender will require two months of the new mortgage payment in reserve. You’ll need cash for closing costs and to set up your tax and insurance escrow account. Don’t forget about furnishing the home.

Rental property. If you feel your monthly cash flow will be squeezed a little too tight, consider renting the property. The purchase is then considered an investment property, and you’ll have to put 20%-25% down. But that extra initial investment has advantages. Since you’re financing less, your monthly payment will be less. The rental income may offset your mortgage payment. You may find a home already furnished, saving you time, money and headaches. If the home has a rental history, then you’ll likely have repeat vacationers, bringing in money quickly. You can list the home on do-it-yourself vacation rental sites like VRBO.com and HomeAway.com or hire a local property management company. Budget for their fees, cleaning costs, repairs, landscape maintenance, HOA dues and local taxes when calculating the proper rent schedule. Remember that your time is money, too.

With home prices starting to rebound, now may be the right time to add to your investment portfolio. It will be a long-term hold, and undoubtedly your family’s favorite.

Share with us your second home stories. What was the event that finally made you decide a beach home was going to be real? What funny traditions have you started there?

Dee Pajak is a Mortgage Loan Officer at Fairway Independent Mortgage on Bainbridge Island. As an experienced investor, flipper, landlord, DIY’er and industry speaker, she loves to help people grow their wealth. 678-799-4167  www.SmartLendingByDee.com