So it seems you have come to a decision to buy another house? There are a few fixed reasons why people come to that decision. Perhaps you want to move in a place closer to your family, or you wish not to depend on hotels in your favorite vacation spots. Maybe you decided to leave work and retire in a house far away from the city noise or your children have grown up and left to college leaving the house too big for you. No matter the reason, before bringing this idea to “life,” you will need proper planning because it is not always good time to engage in something that big and financially burdening. We will adduce some primary facts which will help you create a concept of your purchase.
First things first – decide roughly on how much money you will need for a second house. Check the exact percentage of the house you own and what you have by the first mortgage. This can be a great equity in the second mortgage and will significantly ease up the financial burden on it. If you have a full time job with regular wage, you should not have a problem with repayment. However, if you are still meeting ends at the end of every month, this just might not be the right option for you.
Second, do not trust online calculators. These things can only bring you close to the amount you will need to pay. Do yourself a favor… get on your feet and go researching through banks, financial institutions, credit unions and any other lenders in your surroundings. Online calculators do not include taxes, administration fees, nor account creation and maintenance and these factors can increase your monthly payments significantly which will lead you, due to interest rates and long term repayments, to greatly overpaying the amount you loaned.
The third important factor is the time you will spend in your new home. If you have a full time job or your home is far from that house which will be used only for holidays for a week or two, then this might not be a good decision. The house requires maintenance and the longer it is empty, the faster it will decay. You can always decide to move in some residents and put it up for rent, but being a “remote” landlord brings a set of obligations, too. For instance, any repairs that are paid from your pocket require your presence in order not to be scammed. This will bring new financial obligations which will form a bigger burden over your budget.
Remember the first time you were buying a house? It surely is one of the biggest financial moves you have made in your life. With your second mortgage not planned, well, it works the same… but in hard mode. In order to avoid making a mistake, just take some time off to consider it and plan it…when that period passes and the plan is crystallized… then it is perfect timing.