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Anyone lived with family to save down payment?
I am a new RN and our income has doubled, so we are very eager to buy a new house. Problem is the value on our current house (bought in 2003) has tanked. We are going to have to rent it out because it would not sell at the amount we owe on it, not to mention that we have already paid off a third of the purchase price. I am not ready to walk away from that much money and cut the bank a check for $20,000!
My husband and I are considering renting our house out right now (it is a renter's dream so it wouldn't take long) and living with family for six months. This would allow us to save 20%+ for our new home. It would also give us some time to see how this whole rental thing will work and to decide if we want to pay a rental management company or not.
Financially, it would be a great thing to do. We have three options for who to live with (my parents, inlaws, my grandma) and all of them have large homes. It would be myself, my husband, and our four year old. We get along well with everyone, but of course it would be weird to not live in a home of our own. Has anyone done this? Was it worth it? Any advice would be great!
Sara
Re: Anyone lived with family to save down payment?
I wouldn't do it, but everyone is different.
Are you sure you will be approved for both mortgages? You will need to be able to comfortably carry both payments and have an adequate e-fund to cover both properties. We have been renting our house for just over a year and have had some major expenses come up. Things just go wrong.
I don't understand your reasoning here. Why not stay in your current home, save the 20%, then rent it out once you're in your new place?
To answer your question, I think it's asking too much to move in with relatives for 6 months. No matter how well you get along now, that is a long time to disrupt someone's routine, especially if it's been a while since they have lived with a young child. If you do go this route, I would at least offer to pay rent, or cover the utilities. You should certainly pay for your own groceries, help with chores, and make yourselves scarce when your host(s) need space.
I agree with this, unless your family has specifically asked you to move in with them. I would also never feel comfortable staying with anyone, even my own parents, for free at this age (and with a family!). I haven't lived with my parents since I was 18 though, so maybe others feel differently.
I also would be nervous about the renting situation. My cousin had an issue where people renting her place (after she bought new) stopped paying rent and also did some damage to the house. She ended up foreclosing on it. Obviously not all renters are bad (we're renting right now and we're good!), but good idea to take these risks into consideration.
IOE, you will need to qualify for both mortgages without considering rental income in the DTI ratio. The qualifications for the additional mortgage were a little stricter as well since we already had one mortgage. I'm trying to remember, but I am almost positive we had to show 6 months of reserves for both homes as well as the 20% down. My memory is foggy though...but I do know we could not count rental income.
Personally, I would never impose on my family in that way unless we HAD to (meaning, we literally couldn't pay for our own living situation)--and we have a great relationship with our families. I just firmly believe that once you decide to be an adult and have adult responsibilities, then you need to make decisions that do not rely on your parents' money anymore. If you can't afford it, then you don't do it.
In your case, you WANT a new home...you don't NEED one. Wants sometimes have to be put aside if you cannot afford them.
My Valentine Bookends (2~13~13, 2~15~09)
I'm going to be the odd one out here, but I would do it if it was an option. Every situation is different and both of DH's parents have large homes that we could move into easily without it being too bad. It might be annoying for awhile, but if it would help us get where we wanted to be financially I think we could live with anything for six months.
Now that I'm thinking about it, maybe we'll do it if we don't find a house we like in the next few months.
Based on my new income and 20% down we have already had verbal approval from our mortgage company. They cruched the numbers and that is not an issue. We can easily afford both homes even without rental income.
It is more of a time issue why we are considering living with family for six months. Our son begins school in the fall and our families live in the school district we would like for him to go to. We really need to be out of this house ASAP and into that school district, so that is where it comes into play. If we lived with family we could buy our new home in six months, which really is not very long.
Our families are open to it because they want us to buy our dream home in this amazing school district. We are lucky to have so much support in our lives. Our families are very well off and own their homes, so they already stated that they would never accept rent from us. We already offered to pay for groceries and I already do chores at the houses - LOL. We really are a close family and we just help each other out when needed. I spent my summer weeding gardens for my family since I had some weekdays off and that helped my parents out. They help us out too (watch our dog, my mom hems my pants) and we just have this pay it forward mentality with each other.
I am interested to hear from people who have done this. I know they are out there. I was on this board years ago when we bought our first house and I remember people posting about it. I honestly never thought I would do it either, but if it gets us into our dream home in only six months, with 20% down, and still owning our first house - I think it is worth considering.
But it really is about not being able to afford it. You cannot afford it unless you live "rent/utility/etc free" for at least 6 months to save. Right now, you cannot afford the new home without taking the money from your parents (since that is really what you are doing).
From you last two posts, it is clear that you have already justified it in your own mind. So, if you are fine with it, then I am not sure why you are asking for advice.
My Valentine Bookends (2~13~13, 2~15~09)
I wouldn't, but I'm one of those people who would never move in with family unless I had absolutely no other option. I love my family dearly and get along with them just fine, but I just wouldn't be comfortable in that situation. Everyone is different, though.
Another thing to consider ... moving is a pain in the butt. Seriously. I'm sure it's not any easier with a child involved, kids come with a lot of stuff. I wouldn't want to move twice. It would be a lot easier to move straight from your current house into your new house without a stop at your family's house. You have to arrange for storage of all your stuff, and live without most of your stuff for 6 months. It's just a big hassle to move twice.
Mr. Sammy Dog
Our house will take 4 months to be built and our lease just ended on the house we were renting so we are in the midst of moving back in with our parents. It might be a little different at first but i'm grateful for them. During the next four months we can save for all new furniture, etc. My parents are actually excited for me to move back in!
Your lucky you have such a wonderful family that is willing to help you out!! I think it will be worth it in the end!
My husband and I have moved back with my parents and been living in their house for 6 months. It was out of necessity, but my parents have been awesome about it. Things have gone quite well and we all have a routine that works fine. It was a bit tricky in the beginning, especially for my husband. However, with a few tweaks and lots of open discussions about who is responsible for what, we are doing alright and getting much closer to a down payment then we would have ever been able to otherwise (rent is crazy high here!) I think it would be very difficult with a child, but some grandparents really treasure the opportunity to spend time with their grandchild. In our case, it was the only way my husband and I could afford to move back home from across the country. My parents were so happy for us to come home, they literally welcomed us with open arms.
Everyone is different as are family dynamics. What works for me certainly would not work for my siblings. I wouldn't paint a rosy picture here--- I'd give anything for four walls of my own, but for now it is a wonderful deal and it isn't causing must stress on family relationships.
We sort-of did this. We moved to a different state, but kept our first home as a rental. When we arrived in our new state we stayed with parents for about 2 1/2 - 3 months and then found a very inexpensive rental to rent for 6-9 months.
During that time that we lived with our parents, we were looking at buying, but also found it complicated with new jobs and being new landlords, our mortgage person suggested we wait 3-4 months and then we would qualify for both our first home and a new home. And I might be thrown off the board, but we're not putting 20% down on the new house and still qualified.
We have actually waited a little longer since we didn't find anything in the neighborhood we liked/wanted until about a month ago. We are now under contract and honestly, with someone covering our rental mortgage and a cheap monthly payment on a rental for ourselves, we've been able to save more and have locked in a super low mortgage rate. If my DH would have been able to hold out and live with our parents for longer (We love our parents and get along great, but I also understand/respect when he said he needed his own space), we could have saved about $7k more, which isn't chump change.
So I guess I sort-of followed the moving in with family to save for a bigger/house plan, but not completely. Either way, it saved us quite a bit of money and we registered our oldest for school while living with our parents and then bought in that school area, which is one of the best in the city.
Oh, but talk with your mortgage person b/c ours also told us it wouldn't be a problem and pre-approved us to carry our first house and qualify for a second, more expensive house...then the underwriters came into it and we had to get our renters to sign a 2-year lease since we had less than a year of landlord history and also had to submit copies of the deposit check and first/last month's rent checks to show that we had that much set aside in the bank that we weren't using for our downpayment. If you keep that in mind when you rent out your old place, it might help in the final underwriting process.
Are you united with the CCOKCs?
WTF does anyone care if she moves in with her family for 6 months? So what if she's an adult, they are her parents and they don't seem to have a problem with it. I personally wouldn't do it because I value my privacy too much but I don't think it's morally wrong or anything, it's just not my personal preference.
Is there some unwritten rule that Thou Shalt Not Have Parental Help When Buying a Home? You all would hate us. We own four homes and my IL's gave us 20% down for 2 of them, 10% down for the third (we put another 10% down of our own), and only for the least expensive one did DH and I come up with the full 20%.