Three: Look into the Tax Implications

Second homeowners need to worry about both property taxes (which vary by state and locality) and, if you're renting out the place, income tax. Though taxes are inevitably a burden, a little advance planning can save you thousands of dollars a year. For example, sometimes buying a home just over a town's border can significantly trim your annual property tax bill. And if you're renting out a vacation property, the amount of days you yourself spend there can make a difference in how much you'll owe in income tax.

Four: Come up with Short-Term Cash and Long-Term Financing

Most people pay for their home with a combination of a down payment and a loan for the remaining amount. The higher your down payment, the lower the loan, and the more house you can therefore afford. In order to come up with down payment cash (ideally, 20% of the purchase price), you may need to get creative. Using the equity in your primary home, borrowing against a life insurance policy, or refinancing your car are among the possibilities.

Most buyers will also need to get a home loan to help with the rest of the financing. The number of mortgage options available today could make anyone's head spin. And some of them may tempt you into highly risky behavior, such as paying only the interest you owe for several months or years, only to be walloped with a large, lump sum payment afterward. However, by reviewing various mortgage options and sample payment schedules, and factoring in your own short- and long-term goals, you'll be able to choose a mortgage that suits you.

Five: Consider Nontraditional Financing Methods

With real estate prices at near-record highs, you may have a harder time affording a second home than your parents or grandparents did. One unique way to help finance your second home is to tap the "Bank of Family and Friends." Borrowing from parents, siblings, or close friends lets you keep the tens of thousands of dollars in interest you'll pay over the life of your mortgage loan within your circle, rather than handing it over to a bank.