Can You Afford a Second Home?
Also play with this calculator from SmartMoney.
Before going too far down the road, check with some lenders for down payment requirements and interest rates on second-home loans. Until then, experiment with down payments of 20%, 30% and 40%, and add 0.5 to 1 percentage points to the mortgage rates from the Bankingmyway.com survey.
For a sense of how lenders approach second-home applications, look at this site from Wells Fargo. It shows, for example, that it is difficult to get potential rental income included in the loan qualification calculation, a key consideration if you plan to rent out your second home part of the time.
Even if a lender will approve your loan, think about how comfortable you would be with this new financial obligation. You'll need a healthy financial cushion for unexpected repairs and upkeep, a drop in your pay, a shortfall in rental income or a jump in taxes or insurance fees.
Finally, give your dream a reality check. Many people find, for example, that they lose interest in vacationing at the same place all the time. And a second home can someday become a bone of contention among the buyer's children or grandchildren.
More on real estate:
Buying a vacation home
Buying a second home? Not so fast
Research mortgage rates
--By Jeff Brown