I have recently inherited some money, and our dream was always to purchase a vacation home. My question is… do I pay off my primary mortgage, car, and every other debt first… and then use the balance of the cash as a down payment on the vacation home and get a mortgage on the 2nd home? I would go into that house absolutely debt free.. and the property taxes are half of what we pay now. Are there any tax implications or advantages one way or another?
Keep the mortgage on you primary residence and use as much money as possible ( if you can afford it) on the vacation home. Interest rates on a secondary residence are much higher on a mortgage than in the primary residence.