Buying a Vacation Home
Buying a vacation home can be a Dream Come True. Your dream property is within reach with no hidden fees, and no surprises. Smokey Mountain Mortgage will work hard to make sure that you find the perfect loan.
For the past 12 years we’ve helped Tennesseans all across the state, just like you, buy vacation homes. Contact us today to see how we can help you.
Home prices continue to fall and there are some great deals for buyers looking for a vacation home. Here are five things to know before taking the leap.In many second-home hot spots, prices are still close to their five-year lows. And though a few hard-hit markets could fall a bit further, most economists believe the biggest declines are behind us.
You may think you'll keep the retreat all to yourself, but it's still smart to shop as if you're going to rent the place out. That's because a home's rental potential can affect its resale value.
Before you bid on a house, make sure the homeowners association or township allows short-term rentals (some do not). And keep in mind that renters prefer homes with at least one bathroom for every bedroom.
The typical property rents out just 17 weeks a year. Plus, you'll need to pay for cleaning, maintenance, insurance, and maybe management fees (at least 10% of income).
To get a handle on a property's income potential, ask a management company for a history of rental dates and rates for homes comparable to the one you're considering. If your monthly loan payment is less than or equal to one peak week of rent, you're likely to break even.
Lenders have raised standards across the board, but they're giving extra scrutiny to vacation homes. Use the property primarily as a second home and you'll pay about the same mortgage rate as you would on a primary residence. If you need rental income to qualify for the loan, however, the house is treated as investment property -- and you may need to fork over as much as 25% for the down payment and pay up to one percentage point more in interest.
Rent the house out for two weeks or less and you won't have to report a cent of income to the IRS -- and you can still deduct property taxes and mortgage interest.
Stay there for less than two weeks or 10% of rental days, whichever is greater, and you can deduct operating costs -- everything from cleaning fees and maintenance to linens and repairs -- in addition to interest and property tax. Use and rent a lot? You'll have to allocate the write-offs between personal and rental use, which gets tricky. So talk to your tax accountant before you buy.
Smokey Mountain Mortgage, LLC
110 Westfield Road,
Knoxville, TN, 37919, USA
Tel: (865) 588-5626
Toll Free: (877) 274-2402
Smokey Mountain Mortgage LLC - licensed under the Tennessee Residential Lending, Brokerage and Servicing Act. TN License #1392, National Mortgage Licensing System. NMLS #146366, licensed Mortgage Originator.
Smokey Mountain Mortgage is an Equal Housing Opportunity Lender.
