James Duncan, Thrive Mortgage’s Director of Marketing, recently had the privilege of contributing commentary to an article for Realtor.com. The author’s overarching question for the article was whether purchasing a vacation home during our current environment was a sound move. Our take was a resounding 'Yes*'!

(*Provided you go into it with a sound financial strategy and seek out smart counsel).

The bottom line is that vacation home properties are not investments only catering to the super-wealthy. With proper planning and asking the right questions, Real Estate is still a great tool to build wealth.

Here are the questions we were asked in the article.

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Question: In your opinion, is this a good time to buy a second home/vacation property? Why or why not?

That answer will largely depend on the buyer’s unique situation. Location, budget, financing, amount of the year spent in the property, long-term financial goals, can they get cash-flow through short-term rental, will they need to travel for the closing… There are dozens of variables that buyers will need to take into consideration. That said, for those with income stability and proper planning with a local mortgage professional, purchasing a second home may make a lot of sense.

Without a doubt, lower interest rates have boosted purchasing power and for those who have “buy and hold” mentalities, there likely has not been a better time to buy. It is certainly possible that prices may cool in 2021 as the true impact of the COVID-19 pandemic hits employment, but each market will be different. But I firmly believe Real Estate is always a good investment provided you have the right financial strategy in place.

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Q: Has it become more (or less) difficult for buyers to take out a mortgage on a second home during the pandemic?

The challenge buyers experience in obtaining financing for a second home will vary greatly from one lender to the next. In the age of COVID-19, the primary concern for all lenders, regardless of occupancy status, has been the continuity of income. However, Independent Mortgage Banks like Thrive Mortgage tend to possess a bit more flexibility with their Underwriting and taking compensating factors into consideration.

For Thrive Mortgage, the process is exactly the same as a primary occupancy purchase and our guidelines have not created any additional burdens on the consumer. Additionally, with most loan programs, we have the added advantage of completing the entire transaction digitally including the closing appointment through our Remote Online Notary eClosing established through our great partnership with Notarize, Inc.

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Q: Given the pandemic, are there additional considerations buyers should keep in mind before purchasing a vacation property?

There are a number of additional considerations buyers should keep in mind that probably did not exist 6 to 12 months ago. Namely, they should research the local markets where they are interested in purchasing. Have those states or local communities enacted travel restrictions? If the local economy is largely driven by tourism, is it resilient enough to withstand downturns which could then impact property values?

One of the interesting things to note, however, is that our branches have actually seen a massive uptick in markets we serve which are largely driven by second-home purchases. Surprisingly, since March, those markets have seen substantial increases over the past four months.

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Q: Anything else you’d like to add?

Second-home purchases are not just for high-net-worth individuals either. There are loads of opportunities for prospective borrowers at lower price points as well as the high-end markets.

The best course of action for anyone considering adding a second home to their real estate portfolio would be to talk to a financial professional as well as a local loan officer familiar with the nuances of financing second homes. Developing a solid financial strategy before they begin investigating potential properties will save considerable money, time, and frustration down the road.

For more information about Thrive Mortgage or how we may serve you, visit our Loan Officer or Branch Directories to get connected with a local expert in your area.