finn: Thanks for that additional context, Mahmoud. This helps pain...
Thread: 🏠 💰 Second Home Purchase Decision finn: <message username="finn">Thanks for that additional context, Mahmoud. This helps paint a clearer picture of your strategy.
The assumption transfer angle is actually quite strategic in today's high-rate environment. If you're getting a significantly lower rate through assumption, that could indeed create some rental market advantages if you ever needed to pivot.
Let's think through your concerns:
- Regarding job loss: Your current "survival period" (how long you could maintain expenses from savings) is quite healthy at 48 months under normal conditions. Even with the additional mortgage, you'd still have several months of runway, though obviously this would decrease. Having two properties actually could provide some flexibility - as you noted, you could rent either one to create an income stream if needed.
- For the Florida property specifically: Tourist/vacation areas often have stronger rental potential than typical residential areas. This could work in your favor if you ever needed to rent it out, potentially commanding higher rates during peak seasons.
Some practical considerations:
- Before proceeding, you might want to research rental rates in the area for similar properties. This would give you a concrete backup plan number.
- Given you lived there before, you likely understand the market, which reduces your risk compared to buying in an unfamiliar area.
- Consider setting aside a portion of your cash reserves specifically for this property (beyond the down payment) to account for any unexpected maintenance or periods between tenants if you ever needed to rent it.
The fact that you're thinking through these scenarios (job loss, potential need to rent) shows good financial planning. You're not just looking at the ideal scenario but considering contingencies. Given your strong financial position and the built-in backup options, this still appears to be a manageable risk - especially with the advantage of the assumable lower-rate mortgage.
Would you like me to explore any specific aspect of the rental potential or backup planning in more detail?</message> mahmoud: For context we'd be buying in Florida, where we used to live for a couple of years. We really loved living there and in comparison to where we live now would be a lot more exciting and more to do, so would be okay with some less travel.
But yea, kids and or job loss does make me second guess, maybe not kids alone, but yea loosing one of our incomes would be an issue.
I guess our thought is we'd rent one of the houses out if we really had no choice, whichever makes the most sense if we ever had too. Especially the new house we're assuming a lower rate from an existing loan so maybe could make some money on a rental (or have room to hedge against lower rent prices) finn: Let me help you evaluate this potential home purchase, Mahmoud.
Based on your financial profile, here's my analysis:
Your current financial position is quite strong - you have a good annual income of about $250,000 and your current monthly expenses of $3,700 are relatively modest compared to your monthly income of around $20,700. This leaves you with significant cash flow flexibility.
For the new home purchase you're considering:
- Down payment needed: $33,000
- New monthly payment: $2,400
Adding this $2,400 monthly payment would bring your total monthly expenses to about $6,100, which would still be less than 30% of your monthly income - a healthy ratio in terms of housing costs. You also have a substantial cash reserve of $180,000, which means you can comfortably cover the down payment while maintaining a robust emergency fund.
However, there are a few points to consider:
1. You already have existing long-term debt ($300,000), so this would significantly increase your total debt load
2. While you have strong cash reserves, remember to maintain enough liquidity for other potential needs
3. Make sure you've factored in all costs of a second home (maintenance, utilities, potential vacancy periods if it's an investment property)
Overall, from a pure numbers perspective, you can afford this purchase while maintaining financial comfort. Your income and assets provide adequate cushion for this additional commitment. However, the final decision should also consider your long-term goals and why you want this second home (investment, vacation home, etc.).
Would you like me to elaborate on any specific aspect of this analysis? mahmoud: Looking at buying a second home for 330k (will put 10% down), total payment will be around 2400 with hoa, insurance etc. Is this a good idea? Will we still be comfortable?