Whether it's a luxury condo or rustic cabin, it can be a good investment, earn rental income, provide a major income tax deduction and become the perfect retirement escape.

That's why the National Association of Realtors says a record 1.07 million vacation homes were purchased in 2006, a 4.7% increase even though overall home sales were down. Sales numbers for 2007 should be available at the end of April.

But expect to pay a higher interest rate for a mortgage, usually a quarter to a half percentage point more, and you'll need a bigger down payment, often 10% to 15% more, than for a primary residence.

Click here to learn more about the four financial benefits and the costs of buying a vacation home.