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Buy or Rent?
This is an age old question that only you can
answer. However, we will try to give you as much information as we
can to help you
How much can you afford?
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On average your mortgage payments,
including taxes, should not exceed 28% of your gross income.
However, this is looked at on an individual basis when you apply.
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Here is a loan calculator to help
you find out just how much that new house is going to cost you
each month. Just fill in the amounts below with the given number
of payments, interest rate, and loan amount and you will get your
monthly payment
Remember to add monthly taxes,
utilities and insurance to this figure to be more exact.
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Keep in mind that credit history,
property condition, job stability and other factors may affect the
lender's final decision.
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Another way to give you an idea
of how much of a mortgage payment you can afford is to use the
following 28% -36% test
First, calculate your gross monthly
income (before deductions). You can use income from borrower,
co-borrower, alimony, child support (if 5 years remaining), second
job (if have 2 year history), Social Security, disability etc. (if 5
years remaining), stock dividends, and investment income.
Multiply this gross monthly income by
28%
Multiply this same gross monthly
income by 36%, then subtract monthly debt payments (auto loan, store
charge cards, primary credit card, other credit cards, other loans)
The lesser of the 2 tests equals the
maximum mortgage payment for which you can qualify. Before using the
payment table, remember to subtract monthly taxes and monthly
insurance.
30-Year Conventional Mortgage Payment Table
| Loan Amount |
5 1/2% |
5 3/4% |
6% |
6 1/4% |
6 1/2% |
| $40,000 |
$227.12. |
$233.43 |
$239.82 |
$246.29 |
$252.83 |
| $60,000 |
340.67 |
350.14 |
359.73 |
369.43 |
379.24 |
| $80,000 |
454.23 |
466.86 |
479.64 |
492.57 |
505.65 |
| $100,000 |
567.79 |
583.57 |
599.55 |
615.72 |
632.07 |
| $120,000 |
681.35 |
700.29 |
719.46 |
738.86 |
758.48 |
| $140,000 |
794.90 |
817.00 |
839.37 |
862.00 |
884.90 |
| $160,000 |
908.46 |
933.72 |
959.28 |
985.15 |
1,011.31 |
| $180,000 |
1,022.02 |
1,050.43 |
1,079.19 |
1,108.29 |
1,137.72 |
| $200,000 |
1,135.58 |
1,167.15 |
1,199.10 |
1,231.43 |
1,264.14 |
Planning for a Second Home
When you want to get away
from it all, where does your heart lead you? For some, it's a
shore thing for beachcombing and romantic sunsets. Others take the
first backwoods exit to solitude. Whether there's a mountaintop or
a rural hamlet in your daydreams, the perfect spot for a getaway
home is any place that renews your spirit and lets you do the
things you love.
When researching a second home, be certain
to try out locations. Here are several tips to consider when site
shopping:
- If possible, visit a potential getaway for two
or more years in a row.
- Camp out on that mountain site you're thinking
of buying.
- Take home-swap vacations to check out different
locales.
- Take a virtual vacation, touring homes and
locations on the Internet.
What do you want?
Second home locations are inherently inspiring, so
emotions can run high when you shop for a getaway. To make the
best choice, shop with a clear vision of what you really want.
- What hobbies do you want to indulge or develop?
Does your dream include great fishing, or perhaps a nearby town
dotted with antique shops or a great flea market?
- Do you crave peace—or partying? If serenity is
at the top of the list, you might want to choose a lake that
allows only canoes and johnboats with trolling motors. No noisy
jet skis!
- How often do you plan to get away? It's easy to
"vacation" every weekend if you choose a site that's a two- or
three-hour drive from home.
- How much light do you need? A log cabin in the
woods is fine if you fantasize about Davy Crockett's wild
frontier. If you lean toward light and airy, think bright beach
house instead.
Beyond the weekend retreat
Does spending more than the occasional weekend at
your cottage figure into your plans? Maybe it should. Taking
retirement or early retirement, starting a home-based business, or
telecommuting can open up new possibilities for enjoying your
second home. So, as you shop, keep in mind that the right location
and the right home could be the long-term answer to change—planned
or unexpected—that may come your way.
If you're eyeing a second home as a potential home
office, home-based business, or retirement spot, select one with
enough footage to accommodate your future needs, or one that can
be remodeled. Be sure to check zoning restrictions to see if it's
legal to operate a home business in your area.
Retirement reality check
In evaluating a retirement location, consider:
- What's the quality and accessibility of health
care?
- Is the area safe, the crime rate low?
- What's the cost of living?
- Are there opportunities for part-time work?
- Is the climate comfortable?
- What are the cultural and educational
offerings, such as Elder Hostel programs?
Options
How will you fund the purchase of a second home?
It's a good idea to get some answers before you start shopping.
The numerous cash buyers in the second-home market have the edge.
But if you're not one of them, getting mortgage preapproval before
you launch your search will keep you competitive if you find a hot
property. For quick cash, borrowing from the cash value of a
whole-life insurance policy is one option, as long as you set up a
repayment plan to preserve the long-term value.
Shop around for the best interest rate if you want
a fixed-rate mortgage on the property. Depending on how long you
plan to own the property, consider exploring adjustable-rate
mortgages with, for example, fixed interest and monthly payments
for five to seven years. If sellers own the property outright, ask
if they would consider seller financing. You may be able to
negotiate a lower interest rate, a lower down payment, and a
flexible payment plan.
Renting out your retreat
One way to defray the costs of owning a second home
is to rent it out when your family isn't using it. Here are some
things to consider:
- If the home is in a development with a
homeowners association, ask if you're allowed to rent out your
home. The answer may be no.
- Limit wear and tear by renting only by the
month or the season.
- Use word-of-mouth advertising; rent to friends
(or friends of friends) who may be more likely than strangers to
treat your place with care.
- It takes time to handle inquiries and deal with
potential renters yourself. Is it worth the expense of hiring a
rental manager who will schedule renters and handle emergencies
and maintenance?
- You may want to add amenities, such as hot
tubs, televisions, gas grills, and a modern kitchen, to keep
renters coming back. You'll also want a locked storage room or
closet for your family's possessions
ISLAND REALTY GROUP
PROUDLY SERVING THE ENTIRE SOUTH
JERSEY SHORE REGION!
1701 New Jersey Avenue - North
Wildwood, NJ 08260
(
609.522.4999
FAX 866.571.9766
Joe@IRGroupNJ.com
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