The possibility of owning a second home is exciting, especially if it is a unique vacation home that can serve as an oasis you can escape to whenever you'd like. Having a full-time vacation home means that you can be a lot more flexible with when and how you take your precious vacation time. You can jet to your vacation home any time you want for a little rest and relaxation to rejuvenate you and energize you for the months ahead.

However, many vacation properties can be very costly, and if you are not prepared to pay in cash, you will likely have to secure a loan. The cost can be even higher if you choose a vacation property in a highly popular area, such as near a skiing site or on a beach. Taking on more debt through a vacation home loan is always a big decision, and you should carefully weigh your options and shop around before you sign any dotted lines. If you have done your research and have decided that a loan is for you, make sure you know the proper amount of money you should put down to ensure your financial stability in the long term. 

How Do I Qualify For A Second Home Loan?

While you may have qualified for a loan at a great rate for your principal residence, it is going to take becoming a little more financially savvy to secure home loan deals on a vacation property. For many home loan lenders, such as Fannie Mae, their standards are a bit higher for a second home or vacation home loan. Typically, you should have a strong credit score to get a second home loan; somewhere in the neighborhood of 725 to 750.

If your credit is suffering, you may need to pay down some debts or otherwise finagle with your credit to improve your score before you buy a second home. In addition to having a higher credit score, many lenders for vacation home loans will expect a stronger debt-to-income ratio in order to qualify for a loan. You should also expect the interest rates on any second home loan you qualify for to be higher than those you would get on a standard home loan.

How Much Should I Prepare To Put Down?

As you may expect after having learned about the higher standards for credit scores and debt levels, lenders for vacation home loans will also require more money down. You may have only put down around 20 percent on your primary residence property, but you should expect to pay down more cash for a vacation home. This can be hard to reckon with if you have already started looking at log cabins for sale, but it's important to be realistic even if your dream hunt. So if you find the perfect North Carolinian cabin on a mountain estate, calculate around 30 to 35 percent of the total cost to figure out your down payment.

Should I Buy a Vacation Home Or An Investment Property?

It is important to think about whether you should be buying a true vacation home or whether you would rather purchase an investment property. An investment property differs because you can rent it out when you are not using it in order to make money off your purchase. If you go the investment property route, there are more tax stipulations you should consider, as any rent you make from the property is counted as income.

What Else Should I Consider When Buying A Second Property?

One last thing you should consider when purchasing a second property is that it will require twice the work as owning a singular property. Expect to pay out more in maintenance fees, and to spend more time traveling to your vacation home to provide upkeep.

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