The decision to buy a second home may be made for a number of reasons. For example, you may have a destination where you and your family love to visit, and you may be ready to settle into your own space in this location. You may be considering the tax benefits associated with a second home. And you may even have plans to live in the home as your primary residence after you retire.
While there are numerous benefits associated with the purchase of your second home, there are concerns about how affordable it will be for you to manage the additional expense of another mortgage payment.
Consider All Of The New Expenses Related To The Purchase
A second mortgage payment can be a rather major expense to take on, but it is not the only expense related to buying the new property. In order to ensure that the mortgage payment is affordable, you need to ensure that all aspects of secondary home ownership work within your budget.
For example, consider HOA dues, repairs and maintenance expenses, property taxes, insurance, and cleaning or lawn care service since you will not be available to handle these chores on a regular basis. If you can comfortably take on all of these expenses, you may make your purchase with confidence.
Increase Your Emergency Savings Account Balance
While your current budget may easily accommodate the new mortgage payment and the related expenses, the unfortunate truth is that your income or expenses may not remain static in the future. You may suffer from unemployment or a serious illness that reduces your income. You may have extra expenses due to a car accident or severe damage to a home.
These are just a few of the many things that can happen. It’s important that you have an adequate cash reserve in your emergency savings account that allows you to pay for all of your expenses for at least several months. Because your expenses will increase substantially with your new mortgage payment, you may need to increase your emergency savings account balance.
For more information, speak with your mortgage professional to get a quote for your new mortgage payment and interest rate.