They say discussing money is a societal faux pas, but in the real estate industry, it’s almost a given! We help clients buy and sell real estate every day and are finely attuned to discussing financials without feeling embarrassed.

Although we aren’t financial advisors or tax specialists, our advice indirectly impacts the financial health of our clients. Buying a home is a big commitment and the investment could help you grow your wealth significantly in the future.

The path to homeownership (whether it’s your first property, investment property, or vacation home) is punctuated by many decisions, all of which will have an effect on the final outcome. One of those decisions is how you choose to finance your purchase.

So with that, let’s take a closer look at some of the best ways to finance a vacation home in Park City.

What is Your Intent?

The intent, or use of the property, is certainly important come tax time, but did you know it’s also important when you’re seeking initial financing? In some cases, your lender may offer different rates based on the intent of the purchase.

Keep in mind:

• Will you use the home as a vacation property?
• Will you use the home as an investment?
• Will the home truly be your second home?

The first step in securing financing is to speak with your lender about the options available for your specific use case.

Are you considering buying a second home or investment property in Park City? Read these posts next:

• Why Buy a Luxury Condo in Park City
• Benefits of Owning a Vacation Property in Park City
• Is Park City Good for Investors?

Keep it Local

Many homebuyers in Park City come from out of town. In fact, some might even purchase a property without even seeing it in person. As such, it’s reasonable to assume that many buyers have pre-existing relationships with preferred lenders in their area.

Curious about buying a home in Park City from afar? Read our post about buying a second home in Park City remotely right here.

In most cases, working with the same lender for all your real estate financing needs is smart. This person gets to know you and your family and they already know what your finances look like, which makes the process of securing financing easier.

However, we always recommend buyers in Park City opt for a local lender or brokerage house when buying a home here.

Why?

Although your regular mortgage broker might be a close family friend at this point, they may not know about the local market. A local Park City mortgage broker can often secure better rates and better terms, simply because they know the area like the back of their hand.

Additionally, if you are purchasing a property in a Park City or Deer Valley development, local lenders likely already have programs in place for the specific project with special rates you can take advantage of.

For example, in underwriting, both the buyer and the property must be approved. In many cases, projects and developments will already be pre-approved through a local lender, saving you even more time and stress during the buying process.

Curious about what it’s really like to own a home in Park City? Read these posts next and get to know our amazing neighborhoods:

• Best Gated Communities in Park City
• Within a 10 Minute Drive: Park City’s Best-Kept Secret Neighborhood
• Things You Didn’t Know About Living in Park City and Deer Valley

Should You Pay Cash for a Home?

In an affluent market like Park City, all-cash offers are also common. Many buyers have the capital to purchase a home outright. However, there are certainly pros and cons to buying a home in cash. Here are some things you should consider:

• Pro: You won’t have a monthly payment and you will save money by not paying interest on a mortgage.
• Con: If you’re buying an investment property, the mortgage interest is a write-off, so you will miss out on that tax deduction.
• Pro: An all-cash offer might be more compelling to sellers and you might be able to secure a better price or terms of the sale.
• Con: You will have less liquidity with more money tied up in the property.
• Pro: The process of buying will be shorter and less complicated as you won’t have to go through the financing process.
• Con: You will still have to pay ongoing expenses such as repairs, taxes, renovations, etc.

At the end of the day, purchasing a home in cash is a decision best left for you and your financial advisor. For some people, it makes sense, while others might prefer to go the route of securing a mortgage–even if they have the funds to pay cash.

What are the tax implications of owning a vacation home in Park City? Read this post right here to learn more.

Other Ways to Borrow for a Home Purchase

If a traditional mortgage is not right for you, and you don’t want to purchase in cash, you can also borrow against your portfolio. These types of securities-backed loans use your assets as collateral.

Liquid assets like stocks and bonds are usually the preferred type for these loans. When you borrow against your portfolio, the bank will determine what the “eligible securities” are and will hold them in a separate broker account.

While many buyers use these types of loans for bridge financing, it’s not unheard of for them to be used for bigger loans.

Different terms and conditions may apply depending on your bank. For any banking-related questions and specific details pertaining to your accounts, savings, and investments, we recommend reaching out to your financial advisor for the most up-to-date and accurate information.

What’s the better investment, stocks or real estate? Read this post to find out.

Helping You Find ‘The One’

When it comes to financing your next property, it’s essential that you involve an expert early on. Maybe that means going to a local mortgage broker or discussing with your bank or financial advisor. Once you have a clearer understanding of how you’d like to finance your purchase, that’s where we come in!

Here are CMFH, we’ve helped countless homeowners in Park City and Deer Valley find the perfect home for their needs. Whether you’re buying a vacation home, an investment property, or you’re moving here full-time, our team knows the area and can help you find a property that fits your lifestyle.

If you’re ready to start the buying process, give us a call at 435-647-8035 or email us directly at info@cmfhparkcity.com today.