Living near the Jersey shore in South Jersey, we always dreamed of owning a shore home one day. Over the years we trailed our boat during the summers and enjoyed water skiing and fishing with our three children on the Mullica River but a mortgage, college costs, and then having to take in my mother-in-law made it difficult for us to ever consider buying a second home.
I remember celebrating a few years ago when our children were making it on their own financially and we finally were finished paying off college costs. A few months later while boating with our longtime friends, we saw a home on the river for sale. It happened to be an open house and we all went in. Each of us fell in love with the place and the view from the home.
We decided then and there that the four of us would purchase a home together and although we didn't buy that particular home, we did purchase a shore home overlooking the bay where it meets the Mullica River with an amazing view. Because we valued our friendship, we carefully worked out every detail to ensure the success of our venture together in purchasing this house.
Buying a house along with our friends not only reduced the purchase price by half but would eventually cut the costs and maintenance associated with homeownership by 50 percent. However, in order to afford our half of the shore home's purchase price, my husband and I would need to refinance our primary home's mortgage, which we took out in 2002 when we bought our existing home.
We had great credit, and with nearly two-thirds equity in our existing home, we were able to find a great rate of 2.99 percent with a seven-year balloon. With this great rate, our monthly mortgage payment of $600 stayed about the same while the term increased from 15 years to 30 years and we still had approximately half of the equity remaining in our primary home. Since we did not want to have a mortgage on our shore home, we decided in addition to refinancing to cash out an IRA, although in hindsight I would not recommend this particular way to go as it is costly if you are under the age of 59, which we were.
By refinancing our existing home, my husband and I would be able to purchase this shore house that we would not otherwise have been able to afford -- and because we always planned to downsize once the kids moved out, we expect to pay off this mortgage completely when we downsize or only obtain a small mortgage upon downsizing that we could easily pay off before retiring in about 10 years.
We love the view from our shore home. We alternate during the summer weeks with our friends and get away almost every weekend the rest of the year. We don't regret our decision for a minute to refinance to purchase ourJersey shore house and are loving every moment.