It is easy to sit back and imagine yourself sitting on beachfront property or in a cabin on an idyllic mountain. While the thought of owning your own vacation property certainly sounds perfect, it can admittedly feel daunting. After all, if you are still paying your mortgage on your primary residence, the thought of taking out another or freeing up cash is difficult. With that said, purchasing a second home is more attainable than you might think. In today’s blog, Family Home Loan Texas talks about the ways you can pay for a second home and the reasons it may not be as arduous as you might think.
Your Payment Options
With a traditional mortgage, you have quite a few options at your disposal. From a conventional mortgage to an FHA Loan to more, there are numerous ways to fund your home purchase. A second home, however, has less. In reality, you will probably have to take out a conventional mortgage. The downside to this is needing a much larger down payment — typically close to 20% of the total cost. With that said, after you pay this, your interest rate will most likely be lower, saving you money over time. This is doubly true because you won’t have to maintain mortgage insurance.
If you are 62 or older, you could also take out a reverse mortgage on your primary residence and use your proceeds to fund a down payment and potentially monthly payments as well. The money from this type of loan is considered non-taxable income, so you will receive more than you might initially think. It is also important to note that you can write off property taxes in general, so that’s less money you will have to spend.
Additional Tax Benefits
Being fully aware of potential tax deductions can save you lots of money in general, but this is especially true when purchasing a vacation home. Many people don’t know that you can deduct the full interest on your second property’s mortgage — up to $750,000 a year. Another benefit comes from renting it out while you are not there.
If you rent out this home for fewer than 15 days a year, you do not have to report any income you make to the IRS. If you do end up deciding to rent it out longer than this, you will have to report this income, but you are able to deduct any costs that come from maintaining a rental property.
Before you make any big decisions, it is always advisable to take a close look at your finances to see the pros and cons of owning a vacation home. Even if you can’t deduct as much as you’d like, there is still your emotional happiness to consider, and a beautiful second home can certainly be worth it.
Contact Us For More Information About A Vacation Property
Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about how he and his team can help you find your ideal vacation home.