Can I Afford a second MortgageCould I afford a second mortgage?
Could you afford to buy - and own - a second home?
And the next issue is whether a second home is within your realistic range financially. You will want to consider not only the cost of the sale, but also the various ancillary expenses involved in purchasing and storing a second home, as described below. Certainly the majority of your expenses will come from the sale of your second home.
Begin by looking at the listed fares in the area where you want to buy - but keep in mind that listed fares are only a possibility to negotiate. Dependent on the location, the retail value can be very different - and in a multi- bidder auction, much higher - than what you see.
Refer to "Home List Price: Purchasing is not, as you probably recall from purchasing your first home, the end of the investigation. When settling or shutting down, you will also sense the thorn in the side effects of a number of charges such as points you will be paying in advance for your mortgage, a house valuation charge, the charges to your creditor for preparing a mortgage statement on you, attorney charges, start-up charges for risk, title and flooding insurances and so on.
A few of them are dependent on the selling prices, others on customs. Extract the HUD-1 settlement statement (prepared in conjunction with your mortgage) you obtained with your first home buy - it will help you get an impression of what these acquisition fees will be. Regardless of how much home ownership your second home is, it will take a lot of cash to get it.
One of the most important current financing requirements is probably: increasing mortgage interest payments (if you have a variable interest mortgage). When you plan to let the home, you also need to set up a household bill for imprudent renters who can break down your wall, tarnish your carpet, break your window or otherwise speed up your home's need for repairs.
As a general principle, 1% of the total cost of your house should be included every year. This means, for example, that if you pay $300,000 for your second home, you should deposit $3,000 a year into a dedicated house repair or related emergency savings deposit of $3,000 a year.
If you buy a home that is managed by a community of homeowners, your calculation will be different, as in: "What kind of servicing and repair do I need to take into account for my new condominium project investments? Heaven is the border of how much these can taste! Real estate tax is probably the most costly repetitive expense that you will have to cope with in your second home - and if it goes up, it can be in the tens of millions of dollars.
Real estate taxation, assessment and collection take place at municipal levels (your town or municipality). Real estate taxation is usually paid every three months or every six months. As a rule, the amount you are paying is calculated as a proportion of the estimated value of your home at the moment of buying. At this point, the rate and speed at which your taxation increases will vary depending on where your real estate is situated - in which state and within which jurisdictions.
In California, for example, land tax is rising at a snail's pace, while in Massachusetts the skies seem to be the border. At least they are deductable from your national tax! If you choose a mortgage for your second home, consider how your credit decision will impact the foreseeability of your house expenses in the near term.
Obviously, a fixed-rate mortgage is the most foreseeable because your interest will stay the same throughout the term of the mortgage. But you may not be able to get the same mortgage interest as you see promoted, especially if you are planning to use your home as an object of investment. What is more, you may not be able to get the same mortgage interest as you see promoted. Lenders may, knowing that second home mortgages are the first to go unsettled if the holder strikes a financially harsh blot, and the likely harm the tenant will do to his "securities" may be offering a mortgage on less favorable conditions.
A variable interest mortgage (ARM) has an interest rating that is adjusted up or down according to a certain index (a public figure) and tends to begin lower than a static interest mortgage.