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Assessing Your Finances before Buying a Second Home

2nd homeDeciding to buy a second home can be made for a number of reasons. It may be a destination where you and your family love to spend your free time and you’re ready to find a place of your own in this location. Your plans may be to retire to this location as your primary location and consider the tax benefits that are associated with owning a second home. With the many benefits of purchasing a second home, you may be concerned if you can afford the additional expense of having a second mortgage payment.

Extra Expenses Related to a New Purchase

Having a second mortgage payment is a major expense for you to take own, but it will not be the only expense that you will have in buying a second property. To make sure that you can afford the extra mortgage payment, you need to make sure2ndhome2
you can afford all aspects of secondary home ownership. Examples you should consider are HOA dues, maintenance and repair expense, property taxes, insurance, cleaning or lawn care services when you’re not at the property. If these extra expenses are comfortable for you to take on, you can make your purchase with confidence.

Have an Emergency Savings Account

2ndhome3Even though your current budget can accommodate the new mortgage payment and related expenses, there is the chance that your income or expenses may change in the future. Issues may come up such as unemployment, or a serious illness that reduces your income. There may be extra expenses due to a car accident, or severe damage to a home. This is just a sampling of  that could happen, so it’s important that you have an adequate cash reserve in an emergency savings account that would allow for you to pay your expenses for a least a few months. Since your monthly expenses will increase with your new mortgage, you need to make sure that you are able to have an emergency savings account in addition to your regular saving account.

Taking on a new mortgage payment and other related household expenses for a second home may seem intimidating, but by following these tips you may feel more comfortable with your decision. You can also speak to mortgage professional for a quote on your new mortgage payment and interest rate.

moo thorpe headshotWhether you are selling your home, or buying a home, I can help you with your endeavor. Please contact me at 505.780.0310, or email me at moo@moothorpe.com and I will be happy to assist you.

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