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Thursday, April 17, 2014

Four Ways You Can Afford A Second Home

This does not apply to those who maintain two households from the beginning. Until the past 6 months, our family was a one household family and we'd lived that way for over 13 years.  I went straight from living in the college dorms to living with K.  Splitting households in our case happened as way to prevent divorce (and at times I joke around and say it prevented murder as well ha,ha) but there are other reasons that households split such as when one partner relocates for a job or school.

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Being a cheapskate, money was a big obstacle when it came to living the LAT lifestyle. For me, it came down to the option of divorcing a man whose lifestyle was not compatible with mine or finding a way to make the LAT lifestyle work for us. Here are some options that we went through when deciding:

1. Renting- This may be a great option depending on the area in which you are hoping to live. This did not work for us because I ended up purchasing a house in which the mortgage payment plus tax, insurance, and utilities I came out to $50-100 less than just the rent without utilities for the area.

 2. Purchasing a Duplex- There are a couple of ways this could go. You could purchase the duplex to live in as a couple each in your own living unit or you could as the spouse moving out purchase the duplex and rent out the other half for the majority of your mortgage payment. This was an option I considered. We looked at duplexes and I found the perfect one. The problem is that a duplex is going to be treated as a rental whether you are going to rent it or not and it is going to require a 20% down payment. By the time I calculated the taxes and insurance on the duplex, I was still going to be paying quite a bit per month. In addition, I would have found myself in the job of a part-time land lord.

 3. Purchasing a Second home- This option was perfect for us since we were planning to live in different areas anyway. A lot of times the terms on a loan for a second home are similar to the terms of a first home but your first and second home must be a minimum distance apart; usually 50-60 miles.  If you can stand to stay in your current situation for a few months or have friends/family that will help you out with a place to stay, you may be able to consider homes that sell cheaper because they are not move in ready such as foreclosures and short sales.  I found a second home in a fairly safe yet not the most desirable neighborhood at a good deal.

 4. Building or placing another house on the same lot as your existing home. Consider building a tiny home or moving a mobile home onto land that you already own. This wouldn't have worked for our situation because I was not happy living in the country so far away from other people and activities.

Yes, this is more expensive than living together but in the end it could potentially be a much better deal than a divorce.

How have you afforded a second home in your family? Feel free to share any ideas you have with  readers here.

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