When purchasing a beach vacation home, make sure you consider all of the financial angles of the purchase.
#1 Insurance Costs
First, make sure that you look into the cost of home owner's insurance. Since this will be your second home, you could actually face higher premiums for your beach vacation home. Insurance companies often charge more for vacation home insurance policies since your vacation home presents an increased risk of getting damaged without you noticing and an increased risk of your home getting broken into. Your home presents an increased risk since it will sit unoccupied for most of the year.
Next, beach homes often mean you also need to purchase flood and/or hurricane insurance. Flood and hurricane insurance policies can cost a lot of money and can further drive up your insurance costs.
Make sure that you can afford the insurance costs of a beach home before purchasing one.
#2 Tax Costs
Second, beach homes are often located in nice, tourist neighborhoods. Because of the vacation nature of the area where you are purchasing your home, the property tax rates that you face may be more expensive than they are in nearby towns where there are not a lot of vacation homes.
Make sure that you know the tax rate for the beach home you are interested in purchasing before you buy the home. You should also research and examine how the tax rate has increased or changed over the last ten years, so you have an idea of how your tax rates may change over time.
Finally, you need to determine if you want to finance your beach home or purchase it with cash. Since it is an extra home, you are going to want to make sure that your regular home mortgage and your vacation home mortgage don't consume more than a third of your tax-home pay. You still need to be able to pay your other bills and living expenses.
It can be smart to pay for a beach vacation home with cash. Many owners are more willing to negotiate and provide you with a good deal when you purchase your home with cash.
Before purchasing a beach home from Ocean Beach Cottages, make sure you know how much insurance and taxes will cost you on a yearly basis. Additionally, make sure you have enough cash or room in your budget to pay for the beach home without stretching your monthly budget too thin.