Buying a Summer Cabin

by Craig Middleton

Buying a summer cabin for vacations offers you a lot of freedom. You can go whenever you want and stay as long as you want without having to worry about availability or high rental fees. Nevertheless, like any big purchase, owning a summer cabin means a lot of responsibilities and is not a decision you should take lightly. Asking yourself the following questions can help you determine whether or not you are ready to take such a significant step.

How Will You Finance the Purchase?

On the surface, the process of buying a second vacation home is similar to the process of buying a first home. However, for your summer cabin, you need to get a different loan product called a “second home” mortgage. The qualifications for a second home mortgage are much stricter than what you would need to meet to get a VA home loan for the purchase of your primary residence. In particular, you need to demonstrate the ability to pay both mortgages on your current income.

How Familiar Are You With the Area?

If you are thinking about buying a cabin in a place where you have not vacationed but would like to spend time, you should find out as much about the area as possible before you buy. Make sure that this is really where you want to spend vacations for the rest of your life before making the commitment. However, even if you are buying a cabin in an area where you have spent time for decades and are very familiar, you still need to do some research before you make the decision to buy. Specifically, you need to study home values for comparable properties in the area. This helps you to make the sellers a reasonable offer.

How Much Space Do You Need?

The word “cabin” suggests a place that is smaller and cozier. However, if you have a big family or plan to host social gatherings, you may need a little extra space. Cabins can range in size, and you may be able to find one that is on the bigger end of the spectrum. However, you should also think about ways to use the space that you have more creatively. For example, if the porch is large, it may be more comfortable to host parties out there rather than inside the house. Rather than a separate bedroom for each kid, you may think about accommodating them with bunk beds. Not only is this a more efficient use of space, but it also adds to the feeling of camping.

What Will You Do With Your Property When You’re Not There?

Do you plan to rent it out for the rest of the year? That can be a good way to earn some extra income, but it could affect your taxes if the Internal Revenue Service determines that your cabin is an investment property. Furthermore, depending on where your cabin is located, you might not see as much rental income as you expect during the off-season. However, leaving your property to stand vacant for the rest of the year can be risky as well. It may attract infestations of pests or wildlife, or the pipes could freeze when the temperature decreases. You may need to make trips out to the property periodically throughout the year just to check that everything is okay.

Can You Handle All the Other Expenses Involved in the Property?

As with your primary residence, the mortgage isn’t the only expense involved. You’ll also have to pay for insurance, maintenance, and utilities. If you are purchasing a property that is part of a private community, you have to factor in homeowners association fees as well. Depending on where your property is located, you may have to purchase extra insurance to cover specific hazards, such as floods or hurricanes if the property is located along an ocean or lake.

Don’t go ahead with the purchase of the cabin until you have considered all these challenges and know how to meet them. They are not things that you can figure out as you go along.

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