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How Much Second-Home Can You Afford on the Cape & Islands?

Curbed University delivers insider tips and non-boring advice on how to buy, sell, or rent a home or apartment. Additional questions welcomed to capecod@curbed.com. Up now, how to determine how much second-home you can afford.

Dreaming of a Cape on the Cape? A bungalow by the beach? A Nantucket nest? We could go on, but we'll spare you. From $50K trailer homes to $50M mansions, the Cape & Islands have something for everyone. Whether you're in the daydreaming stage or are ready to take the plunge, how much second-home can you afford?

Unless you're paying cash for a second-home, you'll probably need a mortgage. Since there's a whole lotta information out there on financing a primary residence, we'll highlight the major differences between a mortgage for main digs versus a vacation abode:

· As difficult as it is to get a mortgage these days, lenders are even tighter when it comes to second homes. Interest rates and original points are generally higher on vacation home loans.

· If you plan on renting out the property, make sure the loan you're applying for allows it to be used as such.

The Mortgage: Most home loans are handled by mortgage brokers (to verify a mortgage company or individual, check here), followed by banks (national and community), and credit unions. This handy mortgage calculator can help you figure out what you can afford. Also, you can check FHA debt ratio standards here, which are more stringent than those of conventional lenders or use an debt-to-income ratio calculator. The new Consumer Financial Protection Bureau is working on a Know Before You Owe mortgage form that looks to be useful.

A few other costs to consider:
Location - How far is the vacation property from your primary residence? Do you need to take a plane, the ferry, drive your hooptie, row, or (fingers-crossed!) take a train to get there? Unless you've got Herbie the Love Bug, it's not cheap to get a car over to the Islands.

Maintenance - A back 40 sounds great, unless mowing, weeding, fertilizing, and whatnot just isn't your thing. Remember to factor in maintenance, upkeep and the sometimes shockingly high cost of labor. (Caveat emptor! "You get what you pay for" is not applicable on the Cape & Islands, it's easy to pay a lot for a little. Gather as much info as you can - ask your neighbors for recommendations, check licences, and use Angie's List or Yelp - and cross your fingers.) In addition, there are all manner of water and sewer wars going on in these parts, which could mean significant costs for property owners. Is the town you want to buy in adding a sewer system, pay-as-you-throw trash, putting up/taking down a wind turbine, or thinking of some other new fee to avoid raising property taxes? Due diligence beats a future shock to the bank account.

Insurance - Hurricanes, superstorms, and locusts have kept many insurers away from coastal communities. Thus, thousands of property owners have had to buy pricey home coverage through the Massachusetts FAIR Plan. Recent changes in the auto insurance laws (called "managed competition") had an unexpected benefit of luring some new home insurers to the area, reducing the number of people required to use the state as an insurer of last resort. Result? More options and some money saved, but it's still no bargain.