If you’ve been shopping for home loans for a second home, you know by now that the process is a bit more vigorous than it was for your first home. Even with reasonably good credit, banks and mortgage companies make sure to do a bit more due diligence to ensure that you’ll be both able and willing to make the payments on your second home.

If you’re smart, you’ll at least start the process of being approved for a second mortgage before actually picking out the home. That way, a lot of the red tape can be cleared out of the way while you’re busy picking out that second home. Home loans are tougher for second homes, of course, because banks don’t feel they have as much leverage over you than when you are dealing with the house that you actually live in.

Here are some common reasons for buying a second home, and what kinds of things you should consider if you’re in the process of selecting a home or location:

• Family vacations. Many people buy a second home for the primary purpose of having someplace to go on family vacations. Of course, if that’s why you’re buying your second home, you’ll want to buy one is a place that’s likely to present a lot of opportunities to make memories. What kind of memories you’re looking for is completely up to you, of course. One family might prefer a condo near Disney World and the many attractions in Orlando, while another family might prefer a little cottage by a secluded fishing lake. It really depends on what you like to do as a family.

• Property Investment. A variation on the vacation property theme is to buy a home that can be used for your family’s vacations, then rented out for other families to use while you’re not using it. If you have a hot location, you could not only cover all of your expenses, but make a hefty profit as well. Of course, over time, the property will likely appreciate as well.

• Future Retirement House. If you’ve found someplace you’d like to retire to, it can be a great idea to buy a condo or other property. And until retirement day comes, you could even rent it out, either to regular tenants or to vacationers. The advantage of renting to vacationers is that you can charge more per diem (a lot more). This also affords you the advantage of being able to take your own vacations there. Having more permanent tenants, of course, gives you a bit more security.

Photo via ltdan