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Old 07-29-2015, 08:23 PM   #1
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Default I'm (kinda) buying a house. Discuss

<p>So after some recent fuckery with previous landlords, and the **** rental market in Portland here my parents and I have seriously started looking at buying a house. I would like some mt.net hivemind advice here, both for and against, whatever you think is right. The preliminary plan is to get the loan in my name, and have my parents foot the downpayment (with some help from my savings). My sister is in school right now so they are looking to shelter as much income as the possibly can. This would be a perfect way to put some of it elsewhere. I would pay the mortgage, insurance, taxes, etc. And the 4 other roomates I currently have would help fit the bill. When it comes to the point where I want to leave, we would probably split the profit, or continue to rent if the market for selling is junk.&nbsp;My parents own 3 other rental properties so its not their first rodeo, but it definitely is mine. Overall I think it is a better plan, but would love to hear other opinions.</p><p>Pros:</p><p>Cheaper (maybe)<br />No landlord fuckery. (Other than parents, who so far in my 22 years of life have had my interest come first (sometimes even before theirs) so I'm not as worried about being screwed over)<br />Its my own house, I can do whatever I want with it.</p><p>Cons:</p><p>Possibly more expensive.<br />More to maintain<br />Possible chance of serious financial loss if the market goes to ****.</p><p>I'm 22 years old, just out of college. Make around 65-75k a year. I have 4 other roomates and our overall housing budget is around 1500-1700 a month.</p><p>There is a lot more math to it, and of course if the numbers don't add up it won't happen, but other than that what say you guys?</p>
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Old 07-29-2015, 08:39 PM   #2
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<p>We've talked about this a bit outside the forum, but I'll share some other thoughts here.</p><p>I've done a fair amount of research on buying VS renting, and there are a few key points I've read. It boils down to how long you'd want to keep the house, and what it costs monthly. I've read that as long as you want to keep the house for 5 years or longer, and if your mortgage is less than renting a comparable property, then buying is basically a good idea.</p><p>Here in this area, renting is FAR more expensive than owning a comparable house when it comes to monthly mortgage + property tax VS rent.</p><p>I'm all for owning, just haven't been able to make it work yet. But in all likelihood, I'll be buying a home (potentially with my parents) within the next year, so I'm very interested in hearing this. For me, I've also been looking at duplexes and triplexes. Live in one side/unit and rent the other(s).</p>
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Old 07-29-2015, 08:43 PM   #3
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<p>
Quote:
Originally Posted by turbofan View Post
</p><p>I've done a fair amount of research on buying VS renting, and there are a few key points I've read. It boils down to how long you'd want to keep the house, and what it costs monthly. I've read that as long as you want to keep the house for 5 years or longer, and if your mortgage is less than renting a comparable property, then buying is basically a good idea.</p><p>
</p><p>My parents have no plans for leaving the area. So even if I have to leave then the house will just become another rental property for them. So I think financially it is making sense.</p><p>
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</p><p>Here in this area, renting is FAR more expensive than owning a comparable house when it comes to monthly mortgage + property tax VS rent.</p><p>
</p><p>I have started to hate portland, even though I used to love it. The amount of people that have moved here has just overcrowded the city and really changed a lot of stuff.</p><p>
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Originally Posted by turbofan View Post
</p><p>I'm all for owning, just haven't been able to make it work yet. But in all likelihood, I'll be buying a home (potentially with my parents) within the next year, so I'm very interested in hearing this. For me, I've also been looking at duplexes and triplexes. Live in one side/unit and rent the other(s).</p><p>
</p><p>Nopenopenope. I want my own space. I ******* hate neighbors with a passion. Especially a shared wall. I wish I could live in the middle of nowhere but my profession makes that not an option currently.</p>
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Old 07-29-2015, 08:43 PM   #4
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When you say parents are footing the down payment, we're talking about 20% on a conventional loan?
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Old 07-29-2015, 08:47 PM   #5
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<p>I'd rather have a unit to myself/me + wife and share a wall with another unit than have roommates in the same house. Just my preference.&nbsp;</p><p>Agree with everything else though.</p>
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Old 07-29-2015, 08:48 PM   #6
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This is an open and shut case then, right?

Paying yourself beats paying someone else, especially with the landlord fuckery. You are a DIY guy, maintenance is not all that hard and you can plan for it, the longer you are paying on it the easier it would be to deal in an emergency even. I'd keep the profits from your roomates and just rent to them, they've got no financial risk, they put no money down.

You could loose your *** in the market, but 100% of what you pay for rent is never coming back regardless.

I have a feeling renting/mortgage ratios are going to skew bad soon everywhere if they haven't already. It's pretty bad here in a major college town, and it's bad in the boonies where people can't get a mortgage.

The middle of nowhere sucks, if you haven't tried it you might rethink moving there.
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Old 07-29-2015, 09:43 PM   #7
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My wife and I just closed on our first home yesterday, so this is pretty fresh to me...

Some things I know that may be related to your scenario:

-There was a point where the lender asked if we were borrowing the funds for the down payment, and they dig very deep into your financial background to see what you have and where your money is. As for parents giving the down payment, I'm not sure if that will complicate anything. They need to know if you are borrowing a large sum of money to put up initially, and will be required to pay that back on top of your mortgage.

-We used our combined buying power, total debt to income ratio to obtain our loan. You make a decent income, but maybe not enough to qualify for the amount you want (unsure what your price range is)

-Conventional loans require a minimum of 5%, and will make your offer more attractive than someone with an FHA loan (3.5% down only). And if I'm not mistaken, if you are buying the home and have plans to rent it out, I think a 20% down payment is required. This may complicate things when they go to qualify you for the loan based on your income to debt ratio, and then you throw in there "I can afford this house because I will be getting rent from 4 other guys"...

-Even tho you personally will have no landlords to mess with, the 4 other people will. It's your house, and I'm sure you don't want it to be treated as a rental property. Not a huge deal if these other people are people you've known forever or whatnot, but it can add a different aspect to the relationships now that the owner of the house will be living there too.

-Now that you would be the landlord, you are going to have to pay for the repairs/maintenance that will be required for this poor house that is gonna have the train run on it by 5 dudes...

Andy
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Old 07-29-2015, 09:55 PM   #8
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Maybe i missed it, how much do houses cost out there? For comparison, mine is 1200sq/ft 3 bed 2 bath with a basement and 2 car attached garage. Listed a couple years ago for 110k, in a pretty nice part of town with good schools and all that jazz.


I just got mine. But i saved a bit. Put a pretty hefty down payment down and did a 15 year mortgage.
Since this is my first house a few things caught me off guard. Your Sears, Home Depot, Lowes, Walmart, and any other credit cards will be maxed shortly. Try to consolidate your debt to one card (i transferred the majority of mine to a chase card).
Also, i bought from a private seller. WAYYYYY better than going through the fuckery of banks, real estate agents, foreclosure houses, bidding, and anything else. Would do again.

Obviously your career and personal lifestyle choices are a huge factor in what you do.
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Old 07-29-2015, 10:02 PM   #9
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<p>All good points. The money situation is not set in stone. It very well may turn out that I can't get a loan and my parents have to do it all. I would like to get my name on the loan and mortgage to help build credit though. Conventional loan. 20% down.</p><p>The roomates are my girlfriend, best friend, and 2 other good friends, I'm not too worried about them yet.</p><p>We also have to find the right house...in 2 months.</p>
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Old 07-29-2015, 10:04 PM   #10
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<p>Just drove by a 3bed/2bath 1240sqft for 210k on a 8k sqft lot.. The only 110k house in the area is full of mold and not in a habitable condition.</p><p>&nbsp;</p>
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Old 07-29-2015, 10:05 PM   #11
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You may be able to get on the loan as a co-borrower, that may be your best bet if you can't get approved for the full loan.
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Old 07-29-2015, 10:08 PM   #12
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<p>Good thinking. My parents are going to treat it as an investment. Put 35k down and then have a rental property that we can profit on. If I end up leaving in the next year or so they can manage it and have the experience of taking care of rentals.</p><p>Another important factor. My dad is a contractor, has done the whole rebuild a house from scratch thing, so I'm totally set on learning how to take care of a house.</p><p>We have considered the idea of buying a fixer upper, but I don't think our timeline allows that.</p>
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Old 07-29-2015, 10:24 PM   #13
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Default I'm (kinda) buying a house. Discuss

You will need to have the money for the down payment in your account prior to applying for the mortgage.
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Old 07-29-2015, 10:27 PM   #14
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Next plan of attack is to see how much each of us can get a loan for.
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Old 07-29-2015, 10:32 PM   #15
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Back when I bought my 1st house (boy does the time fly) and borrowed money from my parents for a 30% DP, I had to have them add me to their bank account and then "prove" to the bank that it was equally my money as it was theirs. Simply transferring from 1 to the other was not gonna cut it. Had to provide proof of legitimacy for every single large cash deposit into my account too. They wanted to know where everything over 1 grand came from. Those guys don't mess around, they really go sherlock holmes on checking you


.....It really doesn't sound like you're ready for a house. SRS
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Old 07-29-2015, 10:45 PM   #16
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Maybe my parents will have to do all of the financing and borrowing. I'm pretty over renting right now. But renting from my parents would be better.
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Old 07-29-2015, 11:30 PM   #17
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Your parents can gift you down payment, that's not a problem and happens on roughly 75% of the loans in Northern California where I work.

The issue to me sounds like your debt ratios and lack of job history. If you buy the house owner occupied, you can't use rental income from the home you're buying to offset your payment unless you have 2 years of rental income reporting on your tax returns. So your parents could use the income if they co-signed. Freddie Mac has a great program for this specific situation where your parents would be Non-occupant co-borrowers.

Is your current job related to the degree you received? That will help.

I have been in residential mortgage lending for about 4 years now, happy to answer specific questions.
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Old 07-29-2015, 11:33 PM   #18
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Thanks for the info. My degree is in computer engineering, and I work as a software engineer so that works.
<br />
<br />It's looking more and more like my parents will be getting a loan. I have no debt and a 700+ credit score. But also no history.
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Old 07-29-2015, 11:41 PM   #19
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It actually makes sense for them to include you on the loan of possible. Interest rates are better for owner occupied properties than investment properties so it would be a win-win, especially if your parents decide to keep this as a rental.

Any good lender should easily be able to make this work for you guys fairly easily. I have done 3-4 of these is the past year, and one in Washington state.
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Old 07-29-2015, 11:50 PM   #20
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Want to do one in Oregon?
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