If you’re directly receiving this newsletter, you’re a client of Portus Wealth Advisors, and for that, we are grateful. You may already quantify the value of our relationship, but if not, this may help you articulate to someone you feel may benefit from what we offer. And without further ado, welcome to the March 2025 Financial Planning Strategies.

Our goal is to provide value to help you exceed your financial goals. The scope of this value is arguably limitless, but often reduced to a focus on investment performance or tax savings. Often overlooked is how our ongoing relationship is imperative to maximize the benefits during uncertain times.

Our role is to strategize with you on how to grow your wealth while also protecting it. Helping you through market volatility, legislative changes, technology, as well as the psychological and emotional nuances that could deter you from your financial plan.

To do our job, we need to understand not only your quantitative info like tax returns and statements and budgets but also the qualitative info like your hopes, dreams, goals, emotions, beliefs, values, biases, family dynamics and more. This is where the customization of financial plans takes shape. Sometimes a win by the numbers isn’t a win because of the repercussions, and we can help guide you and provide options that make sense for you.

While comprehensive, customized financial planning is always best, it’s not a bad idea to start with a rule of thumb. A few of you have asked me about purchasing a new home, so here’s one to keep in your back pocket.

How Much House Can I Afford?

The rule of 28/36 states that your mortgage payment (principal, interest, property tax, and insurance) should not exceed 28% of your gross income. Also, your total debt payments, including the mortgage, should not exceed 36%.

Plug your household income into this calculator to see how much house you could afford.

In addition, the 1% rule states that homeowners should save 1% of their home price per year for repairs.

Can I Afford A Second Home?

The mortgage underwriting requirements for a second home are more than they are for a primary home. You’ll probably need a larger down payment and higher cash reserves, and the rates are typically 0.5% to 0.75% higher.

If you have equity in your primary home, you may use it toward your second home. With a cash-out refinance, you could replace your current mortgage with a new, larger mortgage to tap into the equity. Since it’s a primary home mortgage, the rate is probably lower than a home equity loan or home equity line of credit (HELOC).

Home equity loans or HELOC are second mortgages that use your primary home as collateral. Most loans have fixed rates and are distributed in lump sums. HELOCs have variable rates and are typically used at different times for expenses.

If this is going to be an investment property, you need a higher down payment and interest rate than for a mortgage on a vacation property, as lenders consider them riskier.

Fannie Mae set a minimum credit score of 640 for a second home if you put down 25% or more compared to 620 for a primary. Debt to income ratios are also a little harder if you already have a mortgage. Down payments on conventional loans for primary homes could be as low as 3%, while many lenders require 10% for second homes. Also, you’ll need two to six months of cash reserves to show you can still make payments on a second home if you have a loss of income.

When it comes down to it, a second home also means another set of house expenses, including insurance, furnishing, maintenance, utilities, and property tax. Your budget has probably changed since you first bought a home and took out your first mortgage. Review your income, assets, anticipated expenses to ensure you can take on a second mortgage. Add your second mortgage payment to all of your other debts and expenses and divide by your monthly household income to determine if your debt-to-income ratio is at or below a 43% threshold for a second mortgage. If not, you may need to wait and save up, or consider a smaller, less expensive place home away from home.

Thanks for reading our March 2025 Financial Planning Strategies. If you know of a business owner who could benefit for our advice or our services, a great place to start is with our monthly Business Owner Webinar. Feel free to share this link for them to sign up: https://portusadvisors.com/monthly-investor-and-business-owner-interview-series/

Disclosure Updates:

We recently emailed the 2025 disclosure brochures for Portus Wealth Advisors, LLC, along with our Form CRS, and Privacy Policy. You may also find our brochure online, along with additional information about the firm, by visiting www.adviserinfo.sec.gov . As always, we invite you to visit our website www.portusadvisors.com at any time to read more about the firm and the services we provide. If you have any questions or would like to receive a paper copy of our brochures, please contact us at (704) 936-0084.