Thinking of investing in a second home? Many reasons exist for taking the plunge a second time. Maybe your family loves visiting a certain destination but you’re tired of renting there. Maybe you just want to have the tax benefits associated with a second home, or the opportunity to earn rental income, or perhaps you even plan to live in the home as your primary residence after you retire. These are all the reasons people buy again.
While all these things are strong advantages of owning a second home, there is the additional expense of what may be an additional mortgage payment, among other expenses, to think about. To clarify, we’ve put together the suggestions below that may help your thinking.
Are You Aware of These New Expenses?
A second mortgage payment may be a major expense to take on, but it is not the only expense related to buying the new property. Consider all potential aspects of secondary home ownership. For example:
- Possible HOA dues
- Repairs and maintenance
- Property taxes
- Insurance
- Cleaning or lawn care service for when you are not present
If you are confident you can comfortably take on all these expenses, then you know what you are getting into.
Increase Your Emergency Savings Account Balance
While you may be sure that your current budget will accommodate the new mortgage payment and the related expenses, the unfortunate truth is things may change. 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. Or you may want to renovate beyond what you initially planned to do.
I hate to be a naysayer here, but remember that many things happen that can interfere with the best laid plans. So what to do? Make sure you have an adequate cash reserve in your emergency savings account that allows you to handle all your current, and projected, expenses for–at the very least–several months.
If you already have a cash reserve, you probably will need to increase it. It’s worth the extra trouble to know you won’t be risking your financial security if the worst were to happen.
It can seem intimidating to take on a new mortgage payment and other related household expenses for a second time. But armed with this information, you may be able to more comfortably incur this additional expense and sleep better at night.
Your second home may not be far away. That dream of yours of staying in that special location, or gaining the financial freedom of passive income, can be yours today.
Grand Oaks Funding offers residential and commercial mortgages with personalized service in New York, New Jersey, Pennsylvania and Florida. Talk to us today if you have any questions about this information. We’re here to help! Call 718-477-4405 or contact us through our website.
