Step 1: Decide if buying a vacation home is right for you

Pros of buying a vacation home
Buying a vacation home has the potential to greatly increase your quality of life. Some of the major benefits include:- You’ll save money on vacations since you won’t need a rental or hotel room.
- Having affordable vacations can lead to more frequent and longer trips throughout the year.
- Property is a stable investment that will likely be worth more in the future.
- Vacation properties can qualify for lucrative tax breaks, offsetting some of the costs of ownership.
- The house can be rented out to create a passive income source.
- The house can become your primary home when you retire, and you’ll have a head start on the mortgage.
Cons of buying a vacation home
Home ownership is a large responsibility in itself, and adding a vacation property into the mix can increase that responsibility greatly. Make sure you consider some of the downsides that follow vacation home purchases:- All of the expenses associated with your primary home will recur with your vacation property. Think about the cost of utilities, property taxes, HOA fees and insurance.
- Maintenance costs for a home that is vacant for extended periods are different from a permanent residence. Pests can infest the building, pipes can burst in winter or people can rob or vandalize it.
- If you plan to rent the place out, you may need to hire a property manager to handle the brunt of the workload.
- If you have a lifelong case of wanderlust, you might grow tired of visiting the same location year after year.
- While you do earn equity in your second home, the large upfront purchase and maintenance costs mean you may have less cash on hand in case of emergencies.
Step 2: Determine what you want in a vacation home

Location
You should be well acquainted with any location where you plan to have your vacation home. Since real estate is a long-term investment, you’ll want your new home to have long-term appeal. Do you want it to be within driving distance so you can visit regularly on weekends? Or will it require plane travel so you can experience a different climate?Activities
Do you have specific ideas in mind for what you want to do at your vacation property? Are you longing to be steps from the slopes, with a roaring fire after a day of skiing?Maybe you want to spend time in a larger backyard lounging by the pool, or biking to wineries on backcountry roads. Whatever you choose, make sure you have enough bedrooms and bathrooms to accommodate your guests in style and comfort.Intended use
Many people are looking to turn their second home into a money-maker, and the success of services like Airbnb and Vrbo make it easy. Once you turn the home into an investment property, the terms of your vacation home loan will change.A rental property is seen as a business, and it qualifies for different interest rates and taxes than vacation home financing. Make sure you understand the full implications if you plan to pursue this route, and discuss it with your lender.Style
The style of a house can often take a back seat to the more important factors on this list, but it is an important one nonetheless. When it comes to architecture and interior design, are you drawn to contemporary or rustic chic? Mid-Century Modern or mountain chalet? Open concept plan with a great room or more traditional defined rooms?Having a home that you’re in love with visually can keep you happy with the purchase for years to come.Step 3: Begin your process of buying a vacation home
If your mind’s made up that it’s time to own another property, the next step is learning how to buy a vacation home. It should feel familiar if you own your primary home.For instance:- Determine if you can afford the vacation home. Track your monthly income and deduct your regular expenses. Do you have enough leftover each month to cover another mortgage payment plus utilities and maintenance?
- Get pre-approved for a second home mortgage. Talk to lenders to see if you qualify for a loan and how much that might be. They’ll look at things like your credit score, debt-to-income ratio and how much you’ll need for a down payment.
- Find your new vacation home. Apply the advice in step two to ensure you’re putting your money where it will have the best return on investment and add value to your vacation goals.
Common mistakes when buying a vacation home
Enough people have been in your shoes before that some reliable rules for buying a vacation home have been established. Here’s how to avoid their mistakes when buying your second home.