Whether you’re in the market for a lakeside cottage, a mountain cabin, a ski chalet or an island retreat, the vacation home market is warming up. If you have strong credit scores, this could be the right time to take the plunge.
Vacation home sales are on the rise
According to the National Association of Realtors, vacation home sales recovered in 2009. NAR’s 2010 “Investment and Vacation Home Buyers Survey” indicates that in 2009, vacation home sales rose 7.9 percent nationally to 553,000, up from 513,000 in 2008. Around one in ten residential home purchases in 2009 were vacation homes, about the same share of the market as in 2008.
Half of vacation homes purchased were in the South, 21 percent were in the West, 17 percent were in the Midwest and 12 percent were in the Northeast. Seven out of ten vacation homes purchased were detached single-family homes, and the overwhelming majority of them were more than 100 miles from their owner’s primary residence. The median price of a vacation home increased by 12.7 percent from 2008, possibly because more vacation home sales were occurring in higher-priced markets.
In short, the numbers for 2009 are a good indication that the vacation home market
picture is looking brighter all the time.
A good market for qualified buyers
Prices on vacation homes are rising again, but are still well below vacation home prices from just a few years ago. With interest rates remaining quite low, mortgages on vacation homes are also relatively low. Together, these two factors spell “opportunity” if you’re a qualified buyer: a good deal and a low-interest mortgage on the vacation home you’ve always wanted.
According to a January 10, 2010 article in The New York Times, “Lenders now appear willing to finance second homes, but borrowers must be patient, eminently qualified and strategic about their house choices.”
In general, you need a strong credit score and a substantial down payment to qualify for a mortgage on a vacation home. But requirements can vary from one lender to the next. Make sure that you have a lender and a mortgage that can accommodate your needs.
Get more vacation home for your money
Many vacation homebuyers ultimately sell their primary residence and spend their retirement in their vacation home. If you have the credit score and down payment to qualify for a vacation home mortgage, you’re in an excellent position to purchase the kind of home you might want to live in year round, for years to come.
In the current market you can actually get more value for your dollar than you could just a few years ago. That means more square footage, recent updates and amenities that might once have been out of reach. So if your long-term plan is to buy a vacation home and, when the time comes, retire there, consider putting your plan into action.
