Saving for a Vacation Home
Open a personal savings account to save for a vacation home
You're not ready to retire just yet, but you're starting to think more seriously about that vacation home you've been dreaming of. A vacation home is a great investment as it's unlikely to depreciate much over time if it's in a favorite vacation spot. But that's not why you're thinking of buying one. You want something you and your significant other can enjoy throughout your golden years. The ability to sell or pass the investment to your children and grandchildren is simply an added bonus. But what can you do now to prepare for purchasing your favorite getaway when the time is right? Consider the expenses that will be involved in a vacation home and how a savings account can help you get ready for them.
Saving for a vacation home's mortgage and property expenses
The most obvious cost to save for is the initial purchase price. When you're saving for a vacation home, you want to try to build up much more than the 20 percent down payment you put on your house. This will help you reduce the mortgage amount, which is especially beneficial if you are still making payments on your primary residence. Other costs you should take into account are property taxes and insurance. Obviously you won't be able to save for all of this at once, but having expenses covered for the first two years will help you save more during this time so you don't have to worry during your retirement. Plus, having more income in your personal savings accounts will make you look more stable to lenders and can improve your chances of getting a low-interest loan.
Secondary costs to consider when saving for a vacation home
Maintaining two homes is going to take money, especially if you're hiring someone to take care of the vacation home when you're not using it. Make sure you're planning for expenses like utilities, maintenance on the property, lawn care and garbage removal. Consider if you'll be purchasing a home with rustic utilities like natural gas and an outhouse, or full insulation, plumbing and electricity. If you plan to rent out the home for more than a few months a year, you'll also need to expect higher property taxes. Income from renting could cover this, but be sure to check local legislation before making a purchase.
If you're planning to buy a cabin for snowy winter getaways, make sure it's accessible when you want to use it by saving up for a plow service to keep the road and drive clear. Likewise, make sure you have a caretaker for a beach house in case you're not home to protect it from harsh storms. Finally, save up for travel expenses to and from your vacation home. These can add up, especially if your vacation spot is in another state.
Grow your savings with a high-interest savings account
It's important to build up a secure financial position so you can continue to make payments on your vacation home and primary residence throughout retirement. One of the best ways to do this is to open a high-interest savings account. Making regular contributions and limited withdrawals while you're saving for a vacation home will help you earn even more, preparing you for the expenses related to owning two homes. Citizens Bank has standard savings accounts to get you started as well as high-interest savings options that will grow your balance even further throughout retirement. Speak to a representative to find out which of our personal savings accounts is right for you!