When Should You Purchase a Second Home?
This question might run through any home owner's mind. But to truly know that you can afford it and maintain it is the main question. At the end of the day, you may wonder what really matters when it comes to buying a second home.
1. YOU NEED TO HAVE EXTRA SAVINGS AND INCOME.
This is a no-brainer. They'll want to see that you have enough money and income to make payments on both homes. And never forget, buying a second home means you'll be paying more down payment on the second one than you did on the first one. First and foremost, you need to make sure that you are financially stable.
2. IS YOUR DEBT-TO-INCOME RATIO LOW?
In order to successfully receive a mortgage on a second home, the ratio of your debt-to-income needs to be really low. Usually mortgage lenders have between 36% and 42% as a good number for the ratio outcome.
3. CAN YOU MAKE LARGER MONTHLY PAYMENTS?
It may not seem fair or even make sense, but you will most likely pay more in monthly payments on the second home. Since buying a home is seen as an investment move, banks are not as lenient to lend their money because investors are seen as risky borrowers.
4. WILL YOU HAVE ADDITIONAL EXPENSES?
You will probably spend a lot of time and money on things that you are intending on fixing in the house such as repairs, flooring and anything else needed in a house.
It is extremely important to take your time when you decide to purchase a second home. You need to think of all the disadvantages and advantages, what effects it will have on your family, vacations, spending for the children, car payments, or college savings.