Qualifying for a loan on a second home is easer than it was just five year ago and "two houses are better than one" is now the thinking among a growing number of homeowners. These days, one of the hottest segments of the real estate market is for second homes.

Several factors have driven this burgeoning second home market, including housing price appreciation and the favorable interest rate environment of the last several years. What's at the core of the trend, however, are easier financing options and an aging baby boomer population seeking more spending outlets.

As recently as five or six years ago, extra hurdles got in the way of hassle-free financing of that second property. Lenders often viewed second homes as a higher risk, meaning buyers had to pay slightly higher interest rates and fees and larger down payments.

Today, the guidelines of financing that secondary home nearly mirror those of a primary residence as lenders adapt to changing demographics with the help of sophisticated technology that better assess buyer risk. Such tools enable lenders to offer new home loan programs to address the buyer's needs. Interestingly enough, five to 10 percent down payment is common in second homes.

There are a couple of strategies that have been considered by buyers looking to keep their cash liquid and not tied up in a second-home transaction. Tapping into the available equity from a primary home with a cash out refinance loan, especially if the rate is low enough on a first lien refinance mortgage, is one way to fund a down payment on the second home. This technique can be particularly attractive if the primary home's value has appreciated significantly.

Another option considered is to take out a home equity line of credit (HELOC) from the available equity of the primary home to make the down payment on the new purchase. Buyers need to keep in mind, however, that home equity loans are typically tied to the prime rate, which can fluctuate and affect the interest rate paid on the HELOC.

Buying that beach cottage or that cozy mountain cabin for vacation or retirement plans has shifted from fantasy to reality for many Baby Boomers. This generation, born between 1946 and 1964, represent one of the most affluent consumer segments in the U.S. today. Given that the oldest of the Boomers turn 60 this year, including presidents George W. Bush and Bill Clinton, such lavish spending power has legs for years to come.

According to a survey conducted by the National Association of Realtors® (NAR)*, one in four Baby Boomers owns more than one property. In fact, Baby Boomers are proportionately more active in the second home market, owning 57 percent of all vacation or seasonal homes and 58 percent of rental property.

With wallet-friendly solutions and a receptive customer in the form of a Baby Boomer, lenders today are seeing the demand for second homes add up and yield a positive buying experience. Since the financial circumstances of each buyer of a second home are unique, it may be wise to consult with a tax counselor, financial planner or other trusted professionals when taking the plunge into a second home. This is especially important if the second home is to be used as an investment property-a circumstance that raises many tax questions and can impact loan underwriting, as well.

Other matters for a buyer to consider include insurance expenses, property tax increases, prospects for future appreciation and how property values impact retirement planning. Yet, the point to remember is that lenders are eager to help, which may make that dream vacation home closer than many once thought.

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*The 2006 National Association of Realtors® study, BABY BOOMERS AND REAL ESTATE: Today and Tomorrow, was conducted online by Harris Interactive® between March 31 and April 6, 2006, among a nationwide cross section of 1,969 U.S. adults born between 1946 and 1964. Figures for age, sex, race, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents' inclination to be online. With 95 percent certainty, overall results have a sampling error of plus or minus 2.2 percentage points; the sampling error for various sub-sample results is higher and varies.