Planning for a Second Home

Assessing Your Needs

When you want to get away from it all, where does your heart lead you? For some, it's a shore thing for beachcombing and romantic sunsets. Others take the first backwoods exit to solitude. Whether there's a mountaintop or a rural hamlet in your daydreams, the perfect spot for a getaway home is any place that renews your spirit and lets you do the things you love.

When researching a second home, be certain to try out locations. Here are several tips to consider when site shopping:

If possible, visit a potential getaway for two or more years in a row.

Camp out on that mountain site you're thinking of buying.
Take home-swap vacations to check out different locales.
Take a virtual vacation, touring homes and locations on the Internet.

What do you want?

Second home locations are inherently inspiring, so emotions can run high when you shop for a getaway. To make the best choice, shop with a clear vision of what you really want.
What hobbies do you want to indulge or develop? Does your dream include great fishing, or perhaps a nearby town dotted with antique shops or a great flea market?
Do you crave peace—or partying? If serenity is at the top of the list, you might want to choose a lake that allows only canoes and johnboats with trolling motors. No noisy jet skis!
How often do you plan to get away? It's easy to "vacation" every weekend if you choose a site that's a two- or three-hour drive from home.
How much light do you need? A log cabin in the woods is fine if you fantasize about Davy Crockett's wild frontier. If you lean toward light and airy, think bright beach house instead.

From Second to Primary Home

Beyond the weekend retreat
Does spending more than the occasional weekend at your cottage figure into your plans? Maybe it should. Taking retirement or early retirement, starting a home-based business, or telecommuting can open up new possibilities for enjoying your second home. So, as you shop, keep in mind that the right location and the right home could be the long-term answer to change—planned or unexpected—that may come your way.

If you're eyeing a second home as a potential home office, home-based business, or retirement spot, select one with enough footage to accommodate your future needs, or one that can be remodeled. Be sure to check zoning restrictions to see if it's legal to operate a home business in your area.

Retirement reality check In evaluating a retirement location, consider:

What's the quality and accessibility of health care?
Is the area safe, the crime rate low?
What's the cost of living?
Are there opportunities for part-time work?
Is the climate comfortable?
What are the cultural and educational offerings, such as Elder Hostel programs?

Financing Advice Options

How will you fund the purchase of a second home? It's a good idea to get some answers before you start shopping. The numerous cash buyers in the second-home market have the edge. But if you're not one of them, getting mortgage preapproval before you launch your search will keep you competitive if you find a hot property. For quick cash, borrowing from the cash value of a whole-life insurance policy is one option, as long as you set up a repayment plan to preserve the long-term value.

Shop around for the best interest rate if you want a fixed-rate mortage on the property. Depending on how long you plan to own the property, consider exploring adjustable-rate mortgages with, for example, fixed interest and monthly payments for five to seven years. If sellers own the property outright, ask if they would consider seller financing. You may be able to negotiate a lower interest rate, a lower down payment, and a flexible payment plan.

Renting out your retreat

One way to defray the costs of owning a second home is to rent it out when your family isn't using it. Here are some things to consider:

If the home is in a development with a homeowners association, ask if you're allowed to rent out your home. The answer may be no.
Limit wear and tear by renting only by the month or the season.
Use word-of-mouth advertising; rent to friends (or friends of friends) who may be more likely than strangers to treat your place with care.
It takes time to handle inquiries and deal with potential renters yourself. Is it worth the expense of hiring a rental manager who will schedule renters and handle emergencies and maintenance?
You may want to add amenities, such as hot tubs, televisions, gas grills, and a modern kitchen, to keep renters coming back. You'll also want a locked storage room or closet for your family's possessions.

Source: http://houseandhome.msn.com/Improve/PlanningforaSecondHome0.aspx

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