Borrowing money for a down payment

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Busymom104

Tue, Dec 19 2017, 6:03 pm

@indigo the family who is lending me the money are very comfortable people with very lucrative careers and lots of successful investments. Basically, they wouldn't be missing the money.

amother

Cerulean

Tue, Dec 19 2017, 6:10 pm

Are you and DH making a minimum of 4x the mortgage payment?
That’s what I heard once
You need to make at least 4x, AFTER TAXES

amother

Silver

Tue, Dec 19 2017, 6:40 pm

amother wrote:

Are you and DH making a minimum of 4x the mortgage payment?
That’s what I heard once
You need to make at least 4x, AFTER TAXES

this sounds crazy to me. I'm also looking to buy and we have no where near that. We have about 2.5x.

amother

Magenta

Tue, Dec 19 2017, 6:59 pm

Definitely go for it.
Some people move into the rental basement of the apartment and rent out the top of the house for a few years to save some money and pay off loans. But definitely do b it now. It will only become harder not easier. Especially if your family is supporting you on it. I had to do it secretly because my family wasn't so supportive.

Busymom104

Tue, Dec 19 2017, 7:14 pm

We would make 3x the mortgage every month post tax. We have about 10k post tax income monthly and mortgage would be around $3200. Not sure where 4x the mortgage comes from and I'm pretty sure most people aren't in that situation ...
My family is very supportive . I'm just feeling two sided - on one hand it's financially responsible because life will just become too expensive soon and I won't be able to save and house prices keep climbing. Houses already went up $100k in the past two years in this area. On the other hand it's financially irresponsible to take on that much debt at once.

justforfun87

Tue, Dec 19 2017, 7:17 pm

If you have a supportive family that will lend you the money with no emotional strings attached then I say go for it! I was also unsure of buying but glad we did as our neighbors paid close to 100k more than us a few months later, albeit a bit more fixed up.

amother

Amber

Tue, Dec 19 2017, 7:28 pm

We borrowed around 100K on a payment plan schedule to pay back in 10 years, with interest and kept our mortgage low with no PMI. Im so happy we did it when we did- the house prices skyrocketed and we pay less on our mortgage than people do for 3 bedroom apartments in my area.

I say go for it. Make a firm payment plan and have that as "part of your mortgage". For example, if your mortgage is 2850 then pay 500 a month to the family member so your house payment is really 3350. Prices are going up and its a lot easier in my opinion to pay back then it is to save up.

Make sure legally they gift you the money so the bank doesnt give you a problem.

Mommyg8

Tue, Dec 19 2017, 7:32 pm

amother wrote:

What do you mean by quality of life ?
Also having a tenant is not an option..

I think she meant that she didn't like having debt...

It's definitely nice to pay for a house in cash, or to have a decent amount for the down payment saved up before you buy, but life is just not like that, for the rest of us...

Busymom104

Tue, Dec 19 2017, 7:55 pm

Thanks everyone for your input!

amother

Floralwhite

Tue, Dec 19 2017, 7:58 pm

Busymom104 wrote:

I can technically borrow only $50k and put only 10% down but then my mortgage payments are significantly higher and will include $200 of PMI.

I would definitely do this. It’s worth it to pay PMI and higher monthly payments , and not owe so much money. (Which will take you a long time to pay back) We did this to conserve cash; we have a very low interest rate and we didn’t want to put all our savings into the house. Also, you mentioned your incomes will be going up. You’ll hopefully be able to afford the higher payments. I’d much prefer to owe the bank more money, than a relative. Regardless of how gracious and wealthy they are.

Busymom104

Tue, Dec 19 2017, 8:04 pm

Another thing I worry about is the feeling of having every "extra" financial expenditure scrutinized by family. And also every future child. Like will they be thinking why is she buying this / that or why are they having another kid ..
not sure if this is just some worry I have in my head or if it could really be that way.

amother

Magenta

Tue, Dec 19 2017, 8:08 pm

Busymom104 wrote:

Do people actually make their decision on having kids based on money. I thought it's based on how much energy you have.
I certainly hope they won't judge you on that...

doodlesmom

Tue, Dec 19 2017, 8:57 pm

Is it an option for you to buy and then rent out the place for as long as you can still live in a smaller place for less rent? That will free up more cash to pay the loan back.

amother

Chocolate

Tue, Dec 19 2017, 9:07 pm

amother wrote:

Do people actually make their decision on having kids based on money. I thought it's based on how much energy you have.
I certainly hope they won't judge you on that...

All the time.

amother

Brunette

Wed, Dec 20 2017, 4:34 am

Can you go a but farther out so houses are a wee cheaper? And can u rent out a basement apt? I went 10 minutes out with 5 other families and built a house 3000 square feet. Within 3 years we have over 100 families by us. My house is now worth 200k more than when I bought it. I sent out a small apt and it covers over half my mortgage. I borrowed 22k for the house and bh paid it back within the first 2 years.
If u have a plan then go for it!

amother

Lilac

Wed, Dec 20 2017, 5:00 am

Our income is around the same and we do not have the money to pay back that kind of loan in 10 years. When the school sees your making that much they'll expect full tuition, a loan to family won't necessarily be taken into account. We pay $3k a month in tuition plus $2k a month for childcare because of our hours. Our mortgage is $2.5k and that leaves $2.5k a month for food, clothes and other bills.

Busymom104

Wed, Dec 20 2017, 5:13 am

@lilac right now I only have two kids and I'm only paying one tuition. it'll be a while before I'm paying tuition for 3 kids and by that point my husband's salary will most likely go up a considerable amount. Next year, We would be paying $1000 in tuition and $2000 in childcare and the same for the following year.
DH is also in an industry where he could get a 30% bonus every year. Further I've been told that you can't measure every single item and try predicting the future or you will never take the leap. Life only gets more expensive and at some point you just have to jump.

amother

Crimson

Wed, Dec 20 2017, 3:11 pm

amother wrote:

We just bought and our mortgage is over 1K/month LESS than the average rental in the same area.

That's probably because you put down a nice-sized down payment. Which OP doesn't have. OOC, in which area is this?

amother

Yellow

Wed, Dec 20 2017, 4:27 pm

I'll be the lone dissenter.

I borrowed over $150k from family with an agreement to pay it back (plus a minimal amount of interest) within 10 years. We have about 3 years left and are on schedule to repay it in full, on time and according to all the terms. The loaners were extremely gracious and I don't think they were/are judging everything I spend $ on.

All that notwithstanding... and this is probably my own issue (ie not because of the lenders), I have found the huge debt to be a massive stress for the past 7 years. Every extra penny (and not so extra) we had went to this debt. We have not been able to put anything into savings, it's just been... a huge millstone hanging around my neck.

We bought a mid-level house for the area we live in and our income is more than $350k/year. I know I may say otherwise in 4 years (when the loan is finally paid off and we have our house and can put the $20k-$30k per year that we've been allocating to debt, to other things), but for right now, I definitely regret buying my house and wish I would've bought one that was cheaper and wouldn't have required such significant debt.

amother

Jetblack

Wed, Dec 20 2017, 4:51 pm

amother wrote:

How many children do you have and how much did you pay for your house? How much is your total monthly mortgage payment? Your income sounds high- is it a big struggle to make the payments every month? Did you agree on a certain monthly payment ? I'd really like to hear more about your situation so I can be more informed.
In my case there really is no cheaper housing option (less than $450-500k) and for our jobs we really cannot leave New York.

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