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Here’s How to Build Your Savings for a Second Home

Dollars and house model

Thinking of buying your own getaway property? Lake Chelan is a wonderful place for a vacation home. With the tranquil, small town way of life and numerous activities in and around the water, the valley offers a great retreat from the bustle of everyday life.

As in any other home purchase, the first step to buying a secondary property is to make sure you’re financially ready for it. Browse listings of Lake Chelan homes for sale to get an idea on the price points in the area. Then crunch the numbers to know what you need to prepare for.

How much will a second home cost you?

As of October, 2020, the average price of Lake Chelan real estate for sale is around $405,000 to $416,000. If you apply for a conventional mortgage to finance the home, you will need to prepare a down payment of around 20% to avoid paying private mortgage insurance.

You also have to be ready for the closing costs, which can range from around 1% to 5% of the purchase price, as well as homeowner’s insurance and property taxes.

Furthermore, with a second home, you will now be spending on the maintenance of two homes. You also need to set aside a budget for utilities, and possibly, homeowners’ association fees for your second home.

Tips on how to save for a second home

With a good picture of how much a secondary home will cost you, take a long hard look at your finances to see if buying a second home now is a wise move, or if you need to wait until you’ve built enough savings. Whichever is the case, it’s best to start saving for a vacation home as soon as you’ve made up your mind that you want one.

Consider these tips on how to grow your savings:

  1. Rent out the property

    Renting out your property when you’re not using it can help you cover at least part of your mortgage payments. If you intend to take this direction, you need to choose a property that would be appealing to renters. If you personally prefer a quieter, more secluded location, you have to consider that the property will likely not be as attractive to renters, and therefore not as profitable as you would wish.

  2. Set aside a savings fund for the vacation home

    Consider how much disposable income you have and what your monthly expenses are. Review your monthly budget to determine how and where you can reduce your spending, and commit to saving a certain amount each month for your vacation home.

    A few lifestyle changes may be in order. For example, avoid impulse buying — if you’re able to stop yourself from making an impulse purchase, put the money into the fund as a reward to yourself. Consider cutting back on dining out, or perhaps, let go of an expensive gym membership. Over the long term., these seemingly small savings can build to a substantial amount.

  3. Boost your income

    In addition to reducing your expenses, it would help if you can also increase your income. Look for opportunities for a side hustle or freelancing job that fits your lifestyle and preferences. Or perhaps, you can increase your hours at work for extra pay or take on a part time job in addition to your regular position.

When you’re ready to take the next step, make sure to work only with Lake Chelan Realtors who will always have your best interests in mind. Call us, The Coldwell Banker Lake Chelan Properties team, at 509.682.7777 or send us an email at info(at)CBChelan(dotted)com.