Is 2025 your year to finally purchase the vacation home you’ve always wanted?
No matter how interest rates or housing prices change in the new year, remember that the “right time” to buy a second home is different for everyone.
What's in this article?
In this article, we’ll explore the considerations for buying a vacation home in 2025, including the costs, benefits, challenges and alternatives.
Why are vacation homes in demand?
Vacation homes can serve a range of purposes for families:
- Seasonal escape: Some people purchase a second home for a hobby or seasonal preference, such as a beach getaway in the summer or a place to ski in the winter.
- Family heirloom: Many want to make family memories or have a cherished property to pass on to their children someday.
- Remote workspace: The rise of remote work also has contributed to the desire for a vacation home because more people now have the freedom to work from anywhere.
- Retirement home: Some couples or individuals want to purchase a retirement property where they can permanently move once they are finished working.
The timing and reasoning for purchasing a vacation home is personal and relies far more on your individual goals and finances than market influences.
While the market plays a role in affordability, only you and your family can decide what makes sense for you.
Ready To Take Your Next Step?
The benefits of buying a vacation home
Buying a vacation home has many personal and financial advantages.
Let’s look at the top benefits of purchasing a vacation home in 2025.
Personal benefits
- Acquire a dedicated space to relax, recharge or entertain
- Customize a home to suit your tastes and needs
- Eliminate the stress of finding new accommodations for each trip
- Gain storage space for vacation gear such as skis, boats or beach equipment
- Use the home whenever you want without restrictions or limited availability
Financial benefits
- Rent out the property when not in use for additional income (depending on local rules and regulations)
- Invest for the long term since real estates typically appreciates over time
- Take advantage of the potential to deduct mortgage interest and property taxes
- Enjoy predictable vacation costs year after year
- Make a purchase which can be a valuable asset to pass on to heirs
While buyers have numerous benefits, every major purchase has risks and considerations.
What to consider before buying a vacation home
Before you purchase a vacation property, it’s important to determine whether it fits into your lifestyle and budget.
Let’s look at the major factors to consider before entering the market.
Does the purchase align with your goals and lifestyle?
Be realistic about how often you’ll use the home and the purpose it will serve in your life.
Will you only be able to visit once or twice a year? If so, is that enough? Is it meant just to be used seasonally? Consider whether the time you can use it offsets the costs of purchasing and maintaining the property.
Additionally, consider the travel required to get to your vacation home. Will it be easily accessible by car, or do you need to fly there?
Can you afford to purchase a vacation home?
Vacation homes will require a down payment and closing costs and fees, amounting to thousands of dollars up front.
You should also consider the costs of furnishing and maintaining the property, including landscaping, snow removal and other services.
Ongoing expenses for the property typically include:
- Property taxes
- Insurance
- Utilities
- Internet
- Homeowners Association (HOA) fees
Homeowners also should have an additional emergency fund to cover unexpected expenses such as appliance replacements, natural disaster recovery or other repairs.
If you’re unsure whether you can afford a vacation home, speak with an experienced mortgage lender like Compass Mortgage.
We can evaluate your finances to determine whether you qualify for a second mortgage and discuss your customized rate and term options.
Where do you want to purchase the property?
Location is among the most important factors for your vacation home purchase.
You’ll have to consider the proximity to your primary residence and its accessibility during different seasons, such as winter or hurricane season.
Work closely with a reputable local real estate agent to help you find a home that matches your needs and interests and to ensure you pay a fair price for the property.
What are current interest rates and home prices?
Current interest rates and home prices can make it easier or more difficult to afford the property you want.
If you’re close to being able to afford such a purchase, consider whether waiting until you’re in a better financial position or a reduction in rates could improve your situation.
At Compass Mortgage, we offer our distinctive Get Committed® program that provides a fully underwritten loan commitment and allows buyers to lock in their interest rate even before they find the property they want to buy.
This helps buyers make more competitive offers without necessarily being the highest on the table.
How will you handle the maintenance and management?
You generally have two main options for managing and maintaining your vacation home:
- Manage the property yourself
- Hire a property manager or caretaker
Of course, the decision to manage the property yourself must involve considering how often you intend to visit.
If you plan to visit several times a year, it may be easier to manage the property yourself. Visiting once or twice a year may warrant hiring a local caretaker or management company.
Buying a vacation home: What to do if affordability is an issue
If affordability is an issue for you now, you fortunately have options for achieving your goals in the future.
Buy with friends or family
Consider sharing costs with friends or family members, including the mortgage payment, maintenance costs or other expenses.
Rent it out when not in use
Use it as a short-term rental property when you’re not visiting for additional income. You can use a platform like Airbnb or Vrbo or market it yourself.
Remember that cities have different rules for short-term rental properties, so understand what’s allowed in your area.
Apply for a second mortgage today
The Compass Mortgage team is here to help you with your questions and the next steps for your vacation home purchase.
If you find yourself thinking in the new year, “Should I buy a vacation home,” get your customized loan options from Compass Mortgage.
We’ll help you finance your vacation home with our simple, streamlined loan process.