First Time Buying a Vacation Home –
How Do You Get Started?
Buying your first vacation home should be a fun and exciting experience. You’re investing in years of enjoyment for yourself and your family and exploring a world of options. However, as with any real estate transaction, the process can be a little daunting. It’s important to take a smart approach that sets you up for a purchase you feel great about.
Realistically, you’ll want to plan for at least two months to go through the entire process, from planning to closing.
Step 1: Evaluate your needs and wants
Maybe you’ve rented a timeshare at a resort you loved and now you want to invest in your own property there. Perhaps you just have a notion of an area you’d like to be able to visit over and over again. Either way, it’s wise to sit back and evaluate exactly what you need in a property before you make any commitments. Involve your family and anyone else you want to enjoy the vacation home in the discussion.
Things to ask yourself:
- How many days a year do I want to use the property?
- Do I want to be the sole user of the property, or will I rent it out to guests when I’m not there?
- How much rental income do I need to earn from my vacation home to comfortably afford any expenses incurred?
- Will I require on-site property management to handle renters’ needs and to look after the property when I’m away?
- What amenities are important to me? Do I want a rustic cottage in the middle of nowhere, or an urban resort with luxury amenities?
- Is there a particular attraction I want to be close to? How will I travel between the attraction and my vacation home?
- How many people will typically use the vacation home at a given time? What number of beds/bedrooms would suit my needs?
- Do I want to purchase an existing home that I can use right away? Would I prefer to purchase something built brand new just for me?
Step 2: Secure funds or financing
Now that you know what you want, it’s time to determine your budget. Review your household finances and determine how much you have available to put as a down payment.
If you will need financing to purchase your vacation home, now is the time to speak to a mortgage broker. You can speak to a broker at your bank, or an independent one that will shop around on your behalf. Either way, you don’t need to pay a mortgage broker; they are paid a commission by the lender to bring in your business.
Your mortgage broker will want to review your current financial situation and will run a credit check. They will help you to determine how much you can afford to spend on a vacation home, then shop around for the best possible mortgage rates and get you pre-approved for financing so that you can move forward confidently.
Tip: Make sure that once you’ve been pre-approved, you avoid financing any other items (vehicles, etc.) while you are shopping for your vacation home. Changes to your financial situation, including an increased debt load or a decrease in income, could change your mortgage eligibility and prevent the sale from closing down the line.
Step 3: Find your dream vacation home
Now you’ve got a clear picture of what you’re looking for and money lined up to invest in your vacation home. It’s time to start shopping!
Your best bet is to contact a realtor to guide you through this stage. Provide your notes from step one and your budget/pre-approval from step two. This gives your realtor clear criteria to find properties that best fit your needs.
It is also useful to select a realtor that operates out of the area in which you’re buying. That way you have someone on your side on the ground, helping you to make informed decisions when you can’t necessarily visit the property yourself.
When you’ve narrowed it down to a couple of favorites, refer back to your checklist. Which one best suits your individual needs?
Step 4: Buy your vacation home!
Once you’ve found “the one”, it would be wise to visit it in-person if possible (although this is less important if you are investing in something like a resort condominium that is not yet built).
Once you’re satisfied with your decision, your realtor will be able to guide you through the rest of the process. Closing typically takes 30-45 days.
With the right planning, buying your first vacation home can be one of the best purchases of your life. You'll end up with a treasured home away from home for years to come.
If you're ready to take the first step and explore a dream vacation home that matches your lifestyle and budget, see how you can become an owner of Orlando’s newest condos: Sycamore Resorts!
Published on 2020-04-27 17:16:54
