More buying second home to get away from it all.
By Lee Stratton

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. Dispatch 1

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."

Dispatch 2 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

Columbus Dispatch August 14, 2005 Home and Garden

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