- 15,852
- 3,476
- Joined
- Apr 4, 2006
- 3,863
- 4,740
- Joined
- Apr 5, 2012
Anyone bought a home/with for their parents without buying something for themselves first?
I live in the Bay Area and so housing prices are ridiculous. I don't plan on buying a house for another 7-8 years (I start work my "career" in January 2016) until my income level is high enough for me to get what I want/save a big enough down payment.
In the meantime, I want to my parents to get something permanent here in the Bay Area. They have been renting for the past 20 years or so but both my sister and I are going to settle down here eventually (she already has a house here).
My credit rating is excellent and so is theirs. Both parents will be retiring in the next 2 to 3 years and be on a fixed income (did county jobs) from their pensions. I'm not sure exactly how much they'll be getting monthly but won't be anything too little or too much I'd think.
Is their any drawback/benefit to me trying to be on the loan also? Should the deed be in my name? I'd be renting a house elsewhere (they'd be living in it). Any advice is appreciated - haven't gotten a clear idea from Google if this is a good or bad idea.
Also what is FHA?
I live in the Bay Area and so housing prices are ridiculous. I don't plan on buying a house for another 7-8 years (I start work my "career" in January 2016) until my income level is high enough for me to get what I want/save a big enough down payment.
In the meantime, I want to my parents to get something permanent here in the Bay Area. They have been renting for the past 20 years or so but both my sister and I are going to settle down here eventually (she already has a house here).
My credit rating is excellent and so is theirs. Both parents will be retiring in the next 2 to 3 years and be on a fixed income (did county jobs) from their pensions. I'm not sure exactly how much they'll be getting monthly but won't be anything too little or too much I'd think.
Is their any drawback/benefit to me trying to be on the loan also? Should the deed be in my name? I'd be renting a house elsewhere (they'd be living in it). Any advice is appreciated - haven't gotten a clear idea from Google if this is a good or bad idea.
Also what is FHA?
Last edited:
- 4,758
- 1,409
- Joined
- Nov 6, 2012
- 22,235
- 10,972
- Joined
- Feb 10, 2003
The only reason you would need to be on the loan is if their income isn't high enough to qualify
fha is federal program to help first time homebuyers
They "insure" your mortgage if you stop paying for it
- 605
- 108
- Joined
- Aug 9, 2012
Check your PM
- 4,758
- 1,409
- Joined
- Nov 6, 2012
@ModernDarwin When you say buy the house for your parents, are you paying the mortgage? Are you putting down the down payment? Are you needed for them to qualify for the loan?
If these answers are No, I wouldn't suggest being on the loan.
If these answers are No, I wouldn't suggest being on the loan.
Last edited:
- 3,223
- 2,309
- Joined
- Mar 27, 2005
For those who PMed me about the lot, here is the empty lot I purchased at the auction. The home to the right is the home in the picture in the posts above.
- 882
- 124
- Joined
- Sep 7, 2005
If given the choice would it be wiser to get approved through ones credit union or a big bank?
- 3,949
- 1,197
- Joined
- Nov 16, 2001
Approved is approved. The real question is what lender can offer the most value.
Do you care about closing on time? Are you willing to pay slightly more for certain services? Are you looking for the absolute rock bottom pricing?
Is there a reason you're looking at a big bank?
- 637
- 201
- Joined
- Jun 13, 2002
moderndarwin
The first thing that comes to mind is that you might have trouble buying your own place in 7-8 years if you're on the loan for your parents house. It's going to affect your debt to income ratio and what you will qualify for.
Can I ask where your parents live now and is their apartment under rent control?
Have you discussed with your parents if they even want to buy a house? Since your parents will be on a fixed income, it's def nice not to worry about property tax, insurance(reg and earthquake), fixing/replacing things around the house.
Last edited:
- 25,260
- 22,236
- Joined
- Jun 15, 2013
Quick question ....
I'm pretty good in math, but by no means am I a math genious. I was wondering if you guys can calculate like the dudes in Million Dollar Listing.
Dudes be like 5550 sq ft and I want 15.5 million and they be like that's 2800 dollars a sq ft, thats to high. We need to be at 2550 a sq ft 14 million. I mean I need a calculator for that **** .... is that just editing or is someone doing that type of math in seconds?
I'm pretty good in math, but by no means am I a math genious. I was wondering if you guys can calculate like the dudes in Million Dollar Listing.
Dudes be like 5550 sq ft and I want 15.5 million and they be like that's 2800 dollars a sq ft, thats to high. We need to be at 2550 a sq ft 14 million. I mean I need a calculator for that **** .... is that just editing or is someone doing that type of math in seconds?
- 4,758
- 1,409
- Joined
- Nov 6, 2012
House is coming along great now that the garage door is on I can't sneak into the house anymore lol. I will see all of the finishes within the next 2 weeks. Closing on September 1 it has been a great process.
Last edited:
- 34
- 13
- Joined
- Sep 17, 2012
Never take a loan from your retirement, the math does not work in your favor.
- 7,688
- 7,706
- Joined
- Jul 23, 2004
Do you guys think that doing a conventional mortgage is better than a FHA loan or vice versa?
- 4,758
- 1,409
- Joined
- Nov 6, 2012
Yes conventional is better due to lower MI premium and MI drops off once your Loan to Value hits 78%.
With FHA PMI never drops off so you will pay the premium for the entire life of the loan. You can always refinance, but if you don't plan to refi within a year or move within about 5-7 years conventional will be better from the jump.
- 8,565
- 16,977
- Joined
- Jan 11, 2014
I would say it depends on ur credit score and what rate you would be getting with the conventional.
- 7,688
- 7,706
- Joined
- Jul 23, 2004
Thanks for the responses guys.
- 3,949
- 1,197
- Joined
- Nov 16, 2001
The APR in the long run will be lower with a conventional though since there are several hundred dollars you're not paying towards foreclosure insurance to the lender (MI).
- 4,758
- 1,409
- Joined
- Nov 6, 2012
That is very true I always forget that conventional requires around 750+ scores to get the best rates compared to minimum 640 for best rates FHA.
- 8,565
- 16,977
- Joined
- Jan 11, 2014
yeah you are right, however, those first couple of years (assuming you put ~5% down) can make a difference. We were going fha due to my credit score and we found out that due to our home having a well AND public water access we couldn't get an FHA loan so we had to go conventional. The monthly payment was about 300 more with conventional but cheaper over the life. We eventually decided to still move forward with the house and a conventional loan even though that extra 300 would have made it a bit tighter. But, something got messed up on the pmi disclosures and my mortgage company ended up footing the bill for the pmi, we lucked out.
- 22,235
- 10,972
- Joined
- Feb 10, 2003
Damn I just down and really did the math
I disagree.
Situations are different for everyone.
If I ever have to borrow from my 401K the interest on the loan and the gains I would have received from the money still wouldn't as much as I would had paid in taxes as long as I paid it back in a timely fashion.
Now that I'm married and have a kid on the way I'll reevaluate this but I know this was true while I was single.
I disagree.
Situations are different for everyone.
If I ever have to borrow from my 401K the interest on the loan and the gains I would have received from the money still wouldn't as much as I would had paid in taxes as long as I paid it back in a timely fashion.
Now that I'm married and have a kid on the way I'll reevaluate this but I know this was true while I was single.
- 3,949
- 1,197
- Joined
- Nov 16, 2001
Yes, it may be more financially advantageous in the short term, but a house is rarely a good short term investment. Its main benefits are to hedge against rising costs (fixed rate loan) and the ability to build equity and pay it off where you won't have ANY payments and can bank the mortgage payment. Unless you're in a really hot seller's market and you're looking to move out, even the Realtor fees won't make it worth it since you'll be paying ~5-6%.
Yes, situations are different, but like you said, your money will be unplugged from your 401K so not only are you missing out on those gains (which will be tax free upon retirement), but you're also paying interest on the money you withdrew. Even in a mediocre year like this year and last year, you would still make about 4-6% on your funds.
- 22,235
- 10,972
- Joined
- Feb 10, 2003
But I'd be paying 35% in taxes on that money if it wasn't in my 401K.
- 637
- 201
- Joined
- Jun 13, 2002
I think it was worth it in my situation. We bought a house in the 2nd half of 2012. My wife pulled about 40K from her Roth IRA for a DP. We purchased the house for 330K in Oakland(in Maxwell Park, close to Lake Merritt). The house is now a rental property and we're about $400 extra a month after everything(mortgage, ins, tax, utilities, misc) and probably worth 500K already.
So it really does depend on the situation
So it really does depend on the situation
Last edited:
- 25,260
- 22,236
- Joined
- Jun 15, 2013
anyone
