Here’s an easy guide to help you evaluate your options for Vail Real Estate.
Ready to turn daydreams of owning a home in the mountains into reality? Does the dream of owning a vacation home in Vail get you excited, but find the idea of buying one too intimidating? It may be actually easier than you may think.
1. Match housing choices to your lifestyle
Before owning a vacation home, many people assume they must own a primary residence, but that’s not necessarily true. What really matters is to match your choices of housing with your lifestyle.
You may be living in a city and want plenty of space you can’t afford. In the city you could rent a modest condo and buy a vacation to spend your time biking, skiing, hiking and more in a place such as in Vail.
2. Decide how you’ll use it
How are you going to use your property? You need to consider how you intend to own and use your property from a financing and tax point of view. You have three options:
Primary residence: You can buy down as little as 3 percent, and you will receive significant tax benefits for being a primary residential homeowner.
Second home: You can use a second home whenever you want, but lenders won’t let you rent out the home. Buy as low as 20 percent down and qualify for the loan using your full primary residence cost plus full second home cost. Mortgage rates and tax benefits are the same as primary residences.
Investment property: If it is not rented, you can rent the home and use it. You can expect rates to be higher than second home rates by .25 percent to .375 percent, and usually your down payment begins at 30 percent. You may qualify for the loan using your primary residence cost plus the full investment home cost, but you can use rental income to help qualify. Usually the tax treatment is less beneficial, however the extra income can help with making loans much more affordable.
3. Understand the total cost of owning it
Many tools on the internet can determine what you can afford in seconds. Although extremely desirable communities such as Beaver Creek or Vail, resort communities do come with extra expenses. Next you will need a lender to formally analyze the required funds available for down payment, closing costs and your reserves. You will also calculate your existing home’s total monthly cost (whether you’re renting or owning it), plus the total monthly holiday home cost.
Next, you also need to plan for other budget items that lenders typically don’t use in their calculations to determine qualifications:
- Gas, electric, cable TV and internet
- Furniture and housewares
- Travel costs to your vacation home
- Total cost of property management items, like cleaning, landscaping and pool/spa upkeep
Make an offer using a local real estate agent and lender
Many vacation properties are in specialized local markets. It’s best to find a local agent and lender in resort communities Vail, Beaver Creek or Aspen.
In resort towns, commissions of real estate agents may be higher and, depending on the area, may also be paid by sellers or buyers. Only a local expert can provide adequate advice. And they will, of course, structure your offer for you and negotiate on all aspects of the deal that are your priority.
Local lenders will also be comfortable in rural areas with appraisals and loans. In less populated areas, assessments are more difficult because comparable sales can be old and difficult to find.
If you follow these steps, your closing will easy, and before you know it, you will be relaxing in your new Vail home.