Tamara Bodrick: Hi! I am Tamara with Wells Fargo & Company. Today we're discussing the benefits and added financial responsibility of purchasing a vacation home.
Owning a vacation home by the ocean next to a golf resort or in the mountains could leave you financially vulnerable if you are not aware. There is definitely more to buying a vacation property than having a place to relax.
Whether you purchase a single-family home, town home or a condominium, there are many things to consider in determining if it's better to buy a vacation property or simply rent a property. First consider whether you will occupy your vacation home as a second home exclusively, or if you plan to rent it out to others when you're away.
Here are some other important considerations. Home values can fluctuate and change over time. This means property values can decrease. Every community and situation is different, so it is important to keep this consideration in mind. You may have other expenses in addition to your monthly mortgage payments on the property, such as homeowner association dues, cleaning services, flood insurance and utilities.
Carefully consider your monthly cash flow to ensure that you're able to manage the additional expenses. You'll need to calculate the amount needed for closing costs and associated expenses, such as repairs, cosmetic improvement and furnishings for your vacation home.
You could also save some money by buying a vacation home that need some renovations, which you could do yourself or find a reliable contractor to handle. Depending on the amount you spend on accommodations, owning a vacation home maybe less expensive in the long run. You may decide to rent your property out while you're away, which could generate additional income. Help ensure your vacation home is restful and enjoyable by carefully thinking through these considerations.