More buying second home to get
away from it all.
By Lee Stratton
THE COLUMBUS DISPATCH
Some people aren't waiting for retirement to head for the hills.
Ernie and Diann Neal have joined the wave of millions of Americans who own
a home away from home.
Three years ago, the Neals bought a four-bedroom log home on 3 acres in
Hide-a-Way Hills, a gated development southeast of Lancaster. They use the
house as a weekend and vacation getaway from their home in Worthington
Hills.
One million vacation homes were sold throughout the United States last year
— a 20 percent increase from 2003, the National Association of Realtors
reported. Of all the homes purchased in 2004, 13 percent were vacation
properties. (Another 23 percent were bought by homeowners who intended to
use their additional homes as an investment.)
With two of their three children grown, two incomes and no mortgage remaining
on their Worthington Hills home, the Neals decided to plow some of their
disposable income into the rural retreat.
"It's a beautiful area of the state," said Mr. Neal, a self-employed consultant
involved in environmental regulation compliance. "It's highly wooded and
hilly. It's only about an hour and 15 minutes from home."
Rather than use the equity in their Worthington Hills home to finance the
second home, the couple obtained a mortgage on the vacation property with
a fixed interest rate for seven years.
Their second home is the favored site of family gatherings, and it might
become the Neals' retirement home in a few years. At that time, the couple
might sell their four-bedroom home in Worthington Hills and buy a small
condo to keep their social ties in Columbus, Mr. Neal said.
"We had a family gathering (in Hide-a-Way Hills) over the three-day weekend
in July," he said. "We get down there quite often in the winter, too. We
don't rent it out at all." That makes the Neals true second-home buyers,
said Jeff Lichtenstein, executive vice president of Market Mortgage Co.,
a Worthington brokerage that helped the Neals find a mortgage.
A second home, in the mortgage industry, is one that is used only by the
buyer, Lichtenstein said. Mortgage underwriters consider a vacation home
that is rented to others to be an investment property.
Second-home mortgages generally offer lower interest and more lenient
down-payment requirements than those for investment properties,
he said.
Some buyers try to hide their intentions for use of vacation properties
to gain the more favorable terms.
"Once you pass the second-home test with the underwriter and complete the
closing, you should abide by what you said," Lichtenstein said. "But I don't
think there are any second-home police out there."
Second-home owners who itemize deductions for their federal income
tax can deduct the interest on up to $1 million of mortgage debt including
first and second homes combined. Real-estate taxes on both properties
are deductible, too.
Owners who rent their vacation homes to others are eligible for different
tax breaks. The second home counts as a residence and a business if
the owners occupy it for at least 14 days, or 10 percent of the days
the property is rented to others. In those circumstances, mortgage
interest, real-estate taxes, insurance, utilities and maintenance can
be claimed for the time the unit is occupied by renters.
Although a growing number of central Ohioans can drive to their vacation
homes in less than three hours, a condo in Florida is still the hot ticket
for baby boomers with disposable income, said Mike Diamond, Columbus
regional manager of Fifth Third Savings and Loan,
"Orlando is No. 1 for people from this area," he said. "The prices are a
little cheaper than along the coasts.
"Naples is No. 2."
Many second -home buyers own their primary residence free and clear. Often,
they use an equity line of credit on that home to pay cash for a Florida
retreat instead of obtaining a mortgage in Florida where the closing costs
are greater.
Others refinance their current mortgages and take the equity out of their
Ohio home to finance a vacation property, Diamond said.
"They re-fi it here and pay cash down there if they can," Diamond said.
"They haven't been hurt (financially) buying condos ! down there," he said.
"People are standing in line to buy in Florida."
Many people approaching retirement are apt to sell their large home in Worthington
to replace it with two condos, one in Ohio and one in a warin-weather locale.
"The generation before us sold everything and moved to Florida," Diamond
said. "Today's boomers want to keep a home here to be near the grandchildren
and a home in Florida to go in January, February and March."
Stan Wollam has taken the first step toward that end.
The Truro Township fire investigator used an equity line of credit on his
Reynoldsburg house to help finance the purhase of a single-family home in
the Lake Erie town of Port Clinton.
"It's a home to get away to," Wollam said. "There's Put-in-Bay, great fishing,
nice restaurants and a lot of activity. It's like a vacation that's just
2 1/2 hours away."
Wollam 57, plans to retire in 15 months and will then seek out warm weather
-weather retreat to complement his Put-iri-Bay home.
"I'm debating between Florida and Arizona. I like the Cold weather
up to Christmas. I spent a Christmas in Arizona when I was in the Air Force.
I don't like listening to Christmas carols in shorts.
But then I want to spend a few months where it's warm?'
Vacation housing
> The typical vacation-home buyer is 55 years old with a total household
income of $71,000.
> 71 percent of vacation home buyers are empty nesters.
> 88 percent of owners drive to their vacation homes.
> 86 percent of owners do not rent their vacation homes.
> The median distance between primary and vacation homes is 49 miles.
> More than half of vacation are in the suburbs.
> The median size of vacation homes is 1,290 square feet.
> The median price of recently purchased vacation homes is $190,000
Source: National Association of Realtors
Second-home owners who itemize deductions for their federal income
tax can deduct the interest on up to $1 million of mortgage debt including
first and second homes combined. Real-estate taxes on both properties
are deductible, too. 
