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- In the fall of 2019, my husband and I started talking about whether it was reasonable for us to buy a second home.
- We loved our first home, but there were some upgrades we wanted in a new property, namely an office for me and a backyard for our kids.
- We asked ourselves whether we could afford to slow down our emergency savings (if necessary) to spend more on a mortgage, and if investing in real estate was a smart decision for our financial future.
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I've somehow landed at an age where the financial responsibilities just keep rolling in. By the fall of 2019, I had two kids to feed (and eventually put through college), one preschool tuition to cover, retirement goals to keep, a monthly car and mortgage payment, and myriad other obligations that all demanded my money.
What I had come to discover about "adulting" up to that point was that a lot of the financial burdens we take on aren't necessarily things we have to do.
No one said I had to have one kid, let alone two. However, once I did, keeping them fed and clothed was, of course, not an option. (Putting away for their college educations is becoming less of an option these days as well, unless I want them drowning in student loans the day they graduate.)
No one forced my husband and me to buy our first home either, and once we did, upgrading to a larger home certainly wasn't something on our list of necessities. Still, by last fall, my husband and I did find ourselves questioning whether buying a new home would be a good move.
Taking on the additional, perhaps unnecessary, financial burden of a larger mortgage wasn't something either one of us took lightly. To help us reach our decision, we realized we would have to ask ourselves some pretty important questions.
1. Were we willing to let go of some of our security to help fund future dreams?
Our financial situation at that time was pretty steady. We had a mortgage we could afford - along with covering all the other important bills - and at the end of the month still managed to have enough leftover to put a decent amount into savings.
An emergency savings fund had always been important to me, and the thought of detracting from that every month to pay for a larger mortgage was daunting.
On the flip side, some of the things that a larger house might afford us - a first-ever office for me, a larger yard for the kids, etc. - were also exciting prospects. This essentially came down to asking ourselves: Were we willing to let go of some of the security that comes along with a known and steady budget to perhaps achieve some larger overall goals?
The answer - with a little assurance from our financial adviser that we weren't totally off base - was yes.
2. Did we want real estate to be a part of our larger financial picture?
We live in an area (a suburb of Denver) where real estate is currently booming, and while I was never a person who expected to own a home at any point in her life (I was a solid renter up until just a few years ago), I will admit that once I did own my own home, I enjoyed following the market to see how our house was appreciating in value.
It suddenly occurred to me after purchasing our first home that, if you stick it out in your home for long enough and are able to pay down a decent portion of your mortgage, a home can actually be a great addition to your overall financial portfolio.
Looking at a potential new home through that lens - rather than just focusing on how much extra we would be spending every month - helped me think of a new house as a potential investment, rather than a money pit.
3. Were we in a solid place to be able to afford everything necessary to purchase a new home?
Wanting to move to a larger place and actually being able to afford to move are two very different things. Besides determining if we had enough money to handle a larger mortgage payment every month, it was important to assess whether we could afford the additional upfront costs that come with a move, especially since we'd be selling a home we already own.
For example, even though we had only moved into our old house three and a half years ago and worked hard to keep it looking nice, our realtor still recommended making some changes in order to get the most money when we listed.
And so, a couple thousand dollars later, we had freshly painted rooms, a new master shower, updated light fixtures, and a number of other smaller changes and upgrades.
On top of that, we had to factor in moving costs and any changes we'd want to make to a potential new home, among other things.
At the end of the day, we had to feel comfortable knowing that we might need to dip into our savings to cover some of the upfront costs, with the hope that when we sold the house, we'd at least be able to recoup our expenditures and put down a decent chunk for a down payment on a new place
After weeks of talking - and lots of running numbers and doing "research" on Zillow - we decided to take the leap.
Two months into our new budget we still have a long way to go before we're truly settled, but for now - as I work in an actual office and the girls run around in the backyard - I feel pretty safe in saying that we made the right choice.
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