Things to Know When Buying a Vacation Home

  • By Jeremy Thompson
  • 01 Aug, 2015
With summer in full swing, and for those of you who enjoy the heat, you may be dreading the impending colder, snowy weather and wondering how you can lengthen your days in the sun. A vacation home is one such way, yet it’s also not limited to those who want a warmer place to retreat […] The post Things to Know When Buying a Vacation Home appeared first on J. Thompson Builders.
Whatever your reasons for considering purchasing a vacation home, consider these things before you make your purchase as it’s a big decision and owning a vacation property does not come without issues.
Consider your goals:Why do you want to buy a vacation home? Will it be an investment property, a place to retire or solely a place to vacation? You may want to use if for all three reasons! With your goals in mind decide what features in a vacation home are important to you.
Spend lots of time in the area:You want to ensure it’s a place you want to visit often. Every place has their cons, and the location of your vacation home will too. Research the area thoroughly to understand the crime rate, history, and natural dangers and disasters (i.e. tornadoes, hurricanes, flooding, etc.).
Consider accessibility:Is the vacation home a short drive from your main residence, or does it require you to take a lengthy plane ride? If it’s the latter, it’s unlikely you’ll use the home very often.
Formulate an accurate budget: Understand all the costs of owning the home including property taxes, insurance (and if additional insurance is needed if it’s location in an area prone to natural disasters), utilities, maintenance and association fees.
Research resale value:Determine how the value of the vacation home may increase or decrease over time. Research areas where property values are increasing, and find out who is moving there and what the plans are for new construction.
Determine if you have someone available to watch the home:The home will still need to be cared for and checked on when you are away. You will most likely need to hire a property manager unless you have friends of family who live in the area. Keep in mind that you’ll also want to have a security system installed on a home that is left vacant often for any length of time.
Be prepared to work while on vacation:Some of the time spent at your vacation home will be spent doing maintenance. It’s not all fun.
Consider renting out the home:Vacation homeowners can benefit greatly by renting out the home when they are not using it. Offering the home for rent provides a source of income that can offset a great deal of your expenses, and you may be able to pay off the home quicker too.
Lastly, if any of these factors encourage you to reconsider a vacation home purchase, know that there are alternatives. Research on sites like VRBO  or AirBnB . It may make more sense to rent from others and have the option to visit various locations as opposed to sticking to one location and being stuck with all the costs of owning the home. Plus when you rent a vacation home vs buy, your time is spent purely on vacationing as opposed to spending time on the upkeep of the home.
Next Steps
Photo Credit,  nathanmac87

J. Thompson Builders Blog

By 7052540976 15 Nov, 2017
Some of these considerations may not be in the forefront of your mind, but there is a long list of aspects you need to consider when building a new home. These should help to get you started thinking about some of the most important pieces of the home building process.
By 7052540976 15 Oct, 2017
This home is being built with our client’s specific wants and needs in mind. The homeowner
requested a single family home with a modern contemporary house design. Previously, he lived
in a townhome and desired a more private, spacious residence. A main floor living with a large
space to entertain and big volume ceilings were a must on the client’s list.

The client decided building as opposed to finding a pre-existing home was a better solution for
him because he wants something specific to his needs. He already had the perfect location in
mind and it was time for him to own his dream home.

The area is ideal for this client because it allows him to live in close proximity to his hobbies and
interests and it also allows him the ability to walk to nearby restaurants or bike to the
surrounding shops. This homeowner will be close to everything. He truly loves the location!
The design concept picked is pictured below. In sticking with a contemporary influence, the
design has clean, simple lines that will result in an extraordinary modern home. We combined
elements of residential and commercial materials and design to bring our client’s unique requests to life.
By 7052540976 15 Sep, 2017

You decide that you are ready to build a custom home for you and your family. Now it is time to figure out how to finance your dreams!

Let’s start with the basics. As with any loan process, do your research. Talk to several mortgage companies that specialize or have a strong understanding/history of working with construction loans. Ask questions and voice your concerns. Companies of course want your business, but they also want to make sure they are a good fit for you and what you are wanting to accomplish. Reviews and referrals are strongly regarded these days. They want to make sure you have the best experience possible.

There are several main differences between a construction loan and a regular existing home loan. An individual construction loan may require a longer credit history  or a higher credit score as well as more money down and along the way. It is more of a process, but it is most certainly worth it. With the right builder, the more involved process becomes a piece of cake; but, that is an article for another time.

Home loans can have a 30 year term whereas a construction loan typically has a max of 1 year. “The rates on this type of loan are higher than rates on permanent mortgage loans. To gain approval, the lender will need to see a construction timetable, detailed plans and a realistic budget, sometimes called the “story” behind the loan,” as reported by  bankrate . While your home is being built, it is typical to make interest-only payments. 

If you are thinking, “I don’t have enough money to pay off a newly built home in 1 year!” Don’t panic.

A popular option is the construction-to- permanent financing sometimes called “one-time close,” a “single close,” or an "all-in-one" loan. Upon completion of construction, the remaining loan balance is converted into a permanent mortgage with terms up to 30 years. Like most loans, “the rate and other terms of the permanent mortgage are set up-front when the entire loan package is closed” according to the  National Association of Home Builders .  Construction/permanent loans are offered by many different lenders, including banks and mortgage companies and are a great option for those of us wanting to finance their home purchase over an extended period of time.

Another option is a stand-alone construction loan. This type of loan can be beneficial if you currently own your home and want a smaller down payment option.   Read more about stand alone construction loans.

There are many different loan options. What makes sense for one person doesn’t make sense for everyone. Make sure you find the right product for you and your particular project. If you want to talk over some options, contact us! We would love to hear your ideas and figure out how we can build your dream home.

View our work , read our reviews on Houzz.com , and visit our Facebook page to get inspired!
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