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Did you buy a house without borrowing money?
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notshanarishona









  


Post  Tue, May 24 2016, 11:24 pm
Most people, at least outside of NY, don't buy a house for more than 500,000 so you won't probably won't get too many responses other than (1) switch neighborhoods, (2) buy a simpler house, etc.
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MrsDash









  


Post  Tue, May 24 2016, 11:58 pm
Who the heck has 200k just laying around? Also, just because you get approved for a certain amount, doesn't mean you should buy it.
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boysrus









  


Post  Wed, May 25 2016, 12:03 am
MrsDash wrote:
Who the heck has 200k just laying around? Also, just because you get approved for a certain amount, doesn't mean you should buy it.


THIS. (the bolded)

We were approved for a mortgage which would have needed monthly payments of 900$ more than we now pay. we decided that even though we were approved for it, we would not be able to manage it, so we bought a cheaper house, and thank G-d we did that. Because finances are tight even with paying $900 less per month, we could never have stretched to that other house!
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amother




Copper


Post  Wed, May 25 2016, 12:04 am
We were gifted a bit of our downpayment by my grandparents, the rest we paid ourselves (it was much smaller though, only about $20,000, it was a long time ago before the housing bubble).
we borrowed money from the bank = in other words, we have a mortgage Smile
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freedomseek









  


Post  Wed, May 25 2016, 9:01 am
Everything you people say about buying what you can afford is true.
It's just not everyone's reality.
Living in boro park, I know that some people have ties here that can't be easily cut by moving (jobs, grown kids schooling, familial ties, etc.)
And $975 in bp is basically the lowest you can go if you have a family of kids .
I am moving out and buying something I can afford but I do understand that not everyone has that option.
And op didn't say she won't be able to repay the loan she needs..
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amother




Orchid


Post  Wed, May 25 2016, 10:28 am
We bought for over 700,000 and paid full upfront. Of coarse this happened over many years hard working years and saving everything. Part of the money was from special earned income. Everything 100% legal but in quite a smart way. I'm not sure anyone can do this this. We were just lucky how things were going b"h.
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amother




Amber


Post  Wed, May 25 2016, 12:18 pm
op here,

for those of you who asked where I live, I live in boro park, and as a different poster mentioned, this is a fantastic price relatively speaking for a family of kids. I agree the house is expensive,but renting such a size house or even a little smaller is the same expensive, or even more expensive so it just made sense for us to do it, and the prices are only going up....
I did get a nice sum from my parents bh, and I do have money put away, when I was talking about borrowing money, I wasnt referring to a mortgage, I was talking about borrowing money from private ppl so I could live with a smaller monthly mortgage payment
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Jeanette









  


Post  Wed, May 25 2016, 12:27 pm
Basically you're saying that you need to borrow money from month to month to meet your mortgage. That doesn't sound sustainable.

Can you rent any part of your house? Rents being what they are it can go a long way toward paying your mortgage.
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Amarante









  


Post  Wed, May 25 2016, 12:43 pm
I still don't understand the economics.

Whether you call it a mortgage or a loan from private people, it is still money that needs to be paid back. If anything, interest on a mortgage is lower than a private person would charge because the bank has a first lien on the house and is protected whereas the private borrower has at best a second lien.

If the private person isn't expecting you to repay, then it's a gift and not a loan.

I understand the frustration of being squeezed out of the housing market but if you realistically can't buy a house within the stricture of a normal mortgage, you probably can't afford it. And as others have pointed out, many prudent people don't take a mortgage for the full amount they are approved for because when they run the figures, the amount left over isn't adequate for the rest of their expenses.

There is a formula for maximum percentage of income to be paid for housing and I think it's at most a third. But keep in kind, this percentage is for non frum families who don't have a lot of frum expenses such as tuition.

Owning a house is deceptively expensive. Taxes, maintenance, utilities must be added in. And unless you or your spouse is handy, maintenance is pricey because something is always going wrong. My father was very handy as he had trained as a ship builder so he was able to do everything. My family isn't so I pay $300 to the plumber when the faucet in the shower doesn't work.
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watergirl









  


Post  Wed, May 25 2016, 12:47 pm
Its still not totally clear - you say that you've bought the house, but from your posts it makes it sound like you don't have all of the funds in place still. Do you have a mortgage? Borrowing money from individuals may make your payments to the BANK smaller, but it wont make your monthly payments any smaller, considering that you will have to make payments to the lender as well, to pay them back.

Lets say you have in mind the hope that you can slowly pay the lender back over a longer period of time - is that really possible? Most bank mortgages are 30 years. You plan to keep track of a family/friend loan for LONGER than 30 years?

When people lend money, they want it to be paid back. Do you actually know people who would be willing to lend you so much money?
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Orchid









  


Post  Wed, May 25 2016, 12:52 pm
watergirl wrote:
Its still not totally clear - you say that you've bought the house, but from your posts it makes it sound like you don't have all of the funds in place still. Do you have a mortgage? Borrowing money from individuals may make your payments to the BANK smaller, but it wont make your monthly payments any smaller, considering that you will have to make payments to the lender as well, to pay them back.

Lets say you have in mind the hope that you can slowly pay the lender back over a longer period of time - is that really possible? Most bank mortgages are 30 years. You plan to keep track of a family/friend loan for LONGER than 30 years?

When people lend money, they want it to be paid back. Do you actually know people who would be willing to lend you so much money?


I think she meant rich people or gemachs who wouldn't charge her interest like the bank. This way, her total payments would actually be smaller.
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sky









  


Post  Wed, May 25 2016, 12:55 pm
It sounds like OP:
- has the money for the down payment
- can afford the mortgage.

would like to borrow from other sources - maybe interest free - so her monthly payment will just be less. When borrowing without interest the monthly payments are much smaller and can be paid back over a much shorter amount of time. When taking out a 700,000 loan over 30 years at 5% you are paying over 600,000 in interest alone. If you don't pay that much in interest the loan can be paid back much faster.
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Amarante









  


Post  Wed, May 25 2016, 1:36 pm
Orchid wrote:
I think she meant rich people or gemachs who wouldn't charge her interest like the bank. This way, her total payments would actually be smaller.


Don't mean to be cynical but I don't think there are a lot of rich people or gemachs who are willing to "lend" a large sum of money without interest and without collateral - or with their collateral being a second lien on a house.

Surely the borrower isn't talking about borrowing $10,000 or so because that amount is really insignificant in terms of the actual monthly payments on a mortgage.

Again, I don't know anyone who has borrowed a large sum of money from a third party in addition to a mortgage except for those who may have "borrowed" money from family members to help with the down payment who may or may not have been prepared to treat as a gift.

Perhaps if the OP explained what she was trying to accomplish, people could make helpful suggestions.

There are many things in life which one can't afford even if one has "excellent" priorities. Yes you might want a million dollar house but you can't afford it. Don't forget that in addition to the high cost of maintenance, there are expensive closing costs and whenever I have moved, I have spent a LOT of money just at a hardware store getting stuff just to make the place habitable - shelf paper, towel racks, trash baskets, curtain rods - window treatments - the list goes on and one and that's just the small stuff. It is astounding how stuff ads up that one doesn't even think about.
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amother




Khaki


Post  Wed, May 25 2016, 1:58 pm
I live in The NY area and bought a small house for under 500k (BH). Even though we were approved for a house more than double that.

Why? Because it's irresponsible to buy something just because you want it (a house in Brooklyn when you can live elsewhere) and not know how to afford it.

ETA: keeping up with the Schwartzes is not a good enough reason to buy a house you can't afford.
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Iymnok









  


Post  Thu, May 26 2016, 4:45 am
Even if it's a "great price" for your neighborhood and family size, you have to do your research if it's good for YOU. These are reasons why it's good for someone else.
I say move to an affordable location. You probably have to by name brand clothes and shoes and furnish your house just so. So even if you could afford the house, can you afford the lifestyle?
If you could bypuy it for that price, you can flip it off also.
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amother




Slateblue


Post  Thu, May 26 2016, 5:33 am
Iymnok wrote:

I say move to an affordable location. You probably have to by name brand clothes and shoes and furnish your house just so. So even if you could afford the house, can you afford the lifestyle?
If you could bypuy it for that price, you can flip it off also.

What a ridiculous assumption. Nobody has to do anything. I live in an expensive house in an expensive neighborhood and do none of the above (even though I can afford to) because I don't want to and I don't care. I have my reasons for living where I do, and no, it doesn't require anything other than paying my mortgage. Living in a fancy place doesn't force you to be fancy in everything you do if you don't want to.
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amother




Tan


Post  Thu, May 26 2016, 6:40 am
I recently bought a house for a price much higher than I could afford. I borrowed money from private people for the down payment. My mortgage is quite high. Before anyone starts telling me what a dumb thing I did. We are married quite a few years. We Don't live on a high standard at all. Quite frugal. Lived in a small apt till now. But, the price of buying a house just keeps going up and up. we have a plan how to pay it back. For us buying a house higher than what we could afford was the right thing for us Smile
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thanks









  


Post  Thu, May 26 2016, 7:08 am
amother wrote:
I recently bought a house for a price much higher than I could afford. I borrowed money from private people for the down payment. My mortgage is quite high. Before anyone starts telling me what a dumb thing I did. We are married quite a few years. We Don't live on a high standard at all. Quite frugal. Lived in a small apt till now. But, the price of buying a house just keeps going up and up. we have a plan how to pay it back. For us buying a house higher than what we could afford was the right thing for us Smile


If you have a plan how to pay it back, that implies you can afford the house. The problem is when people make a plan without realizing that all their expenses grow exponentially, not just the cost of housing. So a "plan how to pay it back", means a real financial plan of how you will cover all your expenses as they grow. Otherwise, its not a real plan.
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