Is a Vacation House Worth it?

Americans love to go on vacations. And in most cases, a vacation is absolutely necessary. When you have been toiling every day to provide for the family, a break is well deserved. But here lies the question: do you need a vacation house?

Buying another home is not something you should take lightly. This is something that should be contemplated upon lengthily and discussed intelligently. A house is not a cheap investment—it could be a good investment but you need a hefty sum in order to achieve it. Here are some things to consider when buying a second home for vacation purposes.

Finances

Can you afford a second home? If your money is overflowing, then go ahead—buy a vacation house. If you are still paying for the mortgage of your home—the house you sleep in every day—then it might be overwhelming for you to have a second set of mortgage to pay for. And even if you can afford to pay two housing amortizations every month, remember that when you purchase a house, you need to pay for the equity, which is at least 10 percent of the price of the house.

But if you have extra money to shell out for the first payment, it’s not going to be that bad. After all, the vacation house is a property. You can rent it out while you are still on the daily grind. However, if you choose not to rent the property out, the interest on property taxes and mortgage can be deducted from your income, which is essentially a tax break.

How often are you going to use it?

If you have fallen for a certain place—a rustic village from a quiet town where the road is lined with trees perhaps—and you would want to return to the place at least once year or so, then perhaps a vacation house will be worth it. This way, you don’t have to scramble to look for a place every time you want to have a breather. It’s practical in terms of time, effort and money.

However, if you plan to see the world and visit one country after another every year, then there is no sense buying a vacation home. The money you spend on the upkeep of a second home can be used to pay for your hotel and other vacation expenses.

The future

Another advantage to having a second home, especially when it is situated in a quiet area, is that it could be your future retirement home. So when you do decide to buy a vacation house, think about the long-term use of the property. Is the place ideal for retirement? So it is essential that you don’t buy a vacation house on a whim. You have to familiarize yourself with the place and consider if it is a place where you want to live at in the future.

Having a vacation house sounds glamorous, but glamour is nothing if you are drowning in debt. Think carefully; write down all the pros and cons of buying a second home. It also helps if you talk to other people who have made similar investments and ask them: Is a vacation house worth it?