Buying A Home
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Best friend moving in to help pay mortgage?
My husband and I have been married for 18 months & have been together for 5 yrs. We've recently started discussing the possibility of FINALLY buying our first home but our huge dilemma is that with our income alone we can't afford a mortgage.
I talked to my best friend about our situation and she's offered to move in to help with the mortgage .
Good idea or Bad Idea?
Help?!
Re: Best friend moving in to help pay mortgage?
If you can not afford a mortgage on your own income alone, then I am not sure how you'll be approved for a mortgage unless you have a co-signer with the income required to secure the loan.
Also, what happens when your friend wants to move out? How will you afford your mortgage?
I would try & find a home that you can afford the mortgage on your own incomes or look for better jobs so you can afford a home.
Problems do not get easier by involving a 3rd party.
Good reply, I second this. If you can't afford a house on your own you have no business bying a house. Period. Rent cheap and save up. Learn to live on a strict budget, you'll need those skills for one day when you have a house and a family anyway.
Ditto the others. Owning a home isn't always the best idea, and in your situation, it's not. Owning a home goes past the mortgage too - something goes wrong? It's on YOU to pay for it. Water heater goes up? Need a new roof? That costs $$$.
~Benjamin Franklin
DS dx with celiac disease 5/28/10
In principle, I'm not opposed to having renters cover part of a mortgage. I have a basement tenant who pays 1/3 of my mortgage and I know that if he moves out I can find another one who will pay even higher rent (I'm charging about 75% of market rates at the moment). And I don't NEED the income, it's just nice to have a ridiculously low mortgage payment.
However it's another story altogether to have a tenant who is sharing the common spaces of your home. Are you going to share a bathroom, kitchen and living room with this woman? What if she cooks things you don't like? Or has friends over? Or starts dating someone who sleeps over a lot. Are you cool with her doing whatever she wants in "your" house? What if she hogs the washing machine? Or watched TV shows that you don't prefer? What if she doesn't have the same level of cleanliness as you? Are you willing to kick her out if something bothers you?
What if she wants to move out? Are you ok with moving a stranger into your home so you can continue to afford your mortgage? What if you have to go six months without a tenant, can you still afford the house? Is it common to rent bedrooms in family homes where you live? Or will it be difficult to find steady tenants? What if you have a tenant with a very different lifestyle or schedule than your own. Are you ok with that?
Are you going to have a formal legal landlord-tenant agreement? Are you ready to pay taxes on that income and meet any legal requirements in your city for being a landlord (here we need a basic business license and certificate of occupancy)? Do you understand tenant's rights in your jurisdiction? Where I live it is virtually impossible to evict a tenant--it takes about 18 months to do so, and the city doesn't care if you lose money that entire time.
If you are ok with all of those uncertainties I see no problem buying a home with the intention of renting a portion of it. However if you can't make the payments without a constant source of rental income I would strongly reconsider.
"The House We Built."
A journey of building the dream.
You cannot afford a mortgage payment on any house or just the mortgage payment on the house you want? Why not? (Insufficient income, too much debt, lack of savings etc?)
Basically you are not ready for home ownership so do not buy at this time.
You want to save for a downpayment, closing costs, moving costs, start up costs, repair and renovation costs, decorating and any furniture/appliances, yard items, tools etc ------AND have a good emergency fund of 6 months EXPENSES in place BEFORE buying a house.
Housing costs - keep to 25-28% of your TAKEHOME pay (that is mortgage+PMI+insurance+taxes+utilities) 30-35% in a HCOL area. More than that you will feel housepoor. Owning a house is much, much more than just the mortgage payment.
If you do not have a budget - start tracking your income and spending to the dollar. Look at see where you can cut back. Post your statistics on the Money Matters board for help if you need/want it.
First off, if you can't afford the mortgage, you aren't going to get approved for it. Unless you are planning on having your friend apply for the mortgage along with you, there really isn't even a point in going any further. And if you do decide to go that route, she will have ownership of your home which means you can not sell or even refinance without her enacting the title of the home.
DS1 born June 2008 | m/c at 9w March 2011 | DS2 born April 2012
Bad idea and it's a great way to lose a friendship.
How will you even qualify for a mortgage if you need someone else's help to afford it?
ETA: Why can't you find something that fits your budget? There are a lot of houses to choose from out there and prices are super low.
Awful idea. Even assuming you could get the mortgage, what happens when friend wants to move on with her life, and you guys still don't make enough to cover the mortgage?
Besides that, if you can't afford it, the bank won't lend you the money to buy the house. They won't count the friend's "rent" as income. The mortgage would have to be in your, your H's, and your friend's name. And that's a really awful idea.
If you want a house that badly, find a way to cut back on your spending and save up for it. Being married for 1.5 year isn't all that long -- I'm guessing you probably haven't tried very hard at the saving thing.
I haven't read the previous posts but someone else probably already brought this up....but it bears repeating: if you can't qualify for a mortgage, you can't buy a home. Having a friend move in with you will not change your position significantly in the eyes of a lender. While they may consider it, I doubt they would take the risk at this time, especially for these circumstances. Lenders will take rental income into account when a buyer is purchasing an investment property but for your primary residence I would be surprised if they took it into account.
The other option is to purchase the home together, all 3 people as equals. I would not recommend this without very serious and detailed consideration including meeting with attorneys and accountants to discuss the exact nature of the relationship. For instance, will you each own it in thirds? Or would you & dh own 50% and the friend would own 50%.
I would recommend saving a bit longer, work on improving your credit and purchase when you are in a better position to qualify as a couple. If you still want to rent out a room for a while, that is fine (always get a lease and always run credit - even with friends!).
Hope that helps & best of luck!
~A Realtor in CA
Lighthouse State Beach, Santa Cruz.