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Medullah posted:If you are absolutely dead set on buying a house I would talk to a mortgage broker about your options. It's an attractive concept to drop a huge amount like that as a down payment on a place, but if that's all you have, you would probably want to explore a smaller down payment with a mortgage with no pre-payment penalty. Then if you're really able to keep up with the monthly payments, and you're still able to save some money, you can look at refinancing later on down the road. Does the situation change at all if my salary gets boosted by 10k+ next month? I should probably explain that much, too. So in August, I was making $42k. I asked my employer for a raise of 50%. They offered me my current 55k, with an additional 10k in three months if I could prove myself capable of handling the new responsibilities they wanted me to take on. Additionally, they floated the possibility of making me a manager after the 10k contingency raise, which implies a higher raise. The thing is, I’m sort of being treated as a manager now anyway. I’m on managerial meetings, and being introduced to vendors as a manager, so I’m not sure what my exact status is at this point. There’s a meeting about it tomorrow, actually, so I’ll bring it up then to see where I stand. I have accomplished a good deal of what they wanted me to do these past two months (not everything, but due to changing company circumstances, some of the tasks that had originally been assigned to me were moved to other people). I’m not banking on getting the 10k, and especially not anything beyond, since that was never explicitly stated, but it might change the math. TwoSheds fucked around with this message at 00:25 on Oct 8, 2018 |
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Oct 8, 2018 00:15
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I don't think his plan to buy is as disastrous as you all seem to. This thread is super conservative, but depending on the market he is in it could be a better decision to buy. I would hold back at least 5k for emergencies. Most of America does not have any kind of emergency fund, so insisting on a Dave Ramsey level of emergency savings before someone decides to fix a significant portion of their housing costs for the next 30 years and acquire an asset that is likely to appreciate in the long term is a little silly. Yes there are risks but for most people, most of the time it works out just fine to scrape together a down payment and buy something.
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Oct 8, 2018 00:18
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H110Hawk posted:Don't beat yourself up over $200/month in groceries + social eating. That 18% raise you're looking at will make your budget MUCH more tenable. Unfortunately my parents are BWM. Not disastrously so, but I don’t think they would be able to provide any kind of significant assistance. Further adding to the misfortune, I have a relationship goal of being alone. I know it would make things more affordable if I had a partner, but that is literally the only benefit in it for me. I realize it’s not normal, but it’s just the way I am.
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Oct 8, 2018 00:24
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Not wanting a spouse ever screams just rent forever, not having a second income when the repair comes a calling isn't going to be easy
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Oct 8, 2018 02:05
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Making 55-65k and wanting a 250k house is completely unrealistic. Even if you were making 100k, a 250k house should be at the very top of your budget, and even then it’s stretching it if you want to save money. Bills alone, especially in the winter when you have to pay for heat, eat up several hundred a month. Emergency repairs for a furnace or water heater or something can range from hundreds to thousands of dollars, a lot more if you need to hire someone to help. Home insurance costs money. If something happens to your house and you need to make an insurance claim, your rates will probably go up. Even if you’re happy eating oatmeal and lentils, you shouldn’t be forced to because you’re paying for a house. Being house poor is one of the worst things you can do to yourself financially, especially if you make the decision knowingly.
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Oct 8, 2018 02:11
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TwoSheds posted:Ok, but if I max out the 401k and IRA, how will I ever scrape together a down payment? What’s the plan, then? Live at home until I can retire? Renting is not exactly an attractive option, either. I would be paying at least 800-900/month for a cramped studio. You don't have to max out your 401k and IRA, what I recommended is that you should at least max out your IRA (because it's a very flexible kind of account and the yearly cap isn't that high anyway) and consider contributing to your 401k. You may not be leaving money on the table in the form of an employer match, but you are leaving money on the table in the form of tax-advantaged retirement savings. I think that you should figure out your retirement investment goals first, make sure that those monthly contributions are being made, and then see what's left to save for a down payment. Even if you don't talk to a financial adviser you should at least play with some of the many online calculators, because those numbers seriously add up but they require that you be active and consistent therobit posted:I don't think his plan to buy is as disastrous as you all seem to. His idea of buying a house is not disastrous. It's likely a BWM kind of move on his salary, but still totally workable from the standpoint that he's not intending to ever have any dependents and wants to live in the same place forever and is fine eating rice and beans forever. That's the kind of situation that 3% down loans were basically made for His plan to burn all of his emergency fund on a down payment is a bad idea. You even said it yourself, some money needs to be set aside for emergencies. His current action of not saving for retirement so that he can build his down payment faster is ill-advised, that situation needs to be fixed before buying a house, not after QuarkJets fucked around with this message at 02:20 on Oct 8, 2018 |
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Oct 8, 2018 02:15
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Koivunen posted:Making 55-65k and wanting a 250k house is completely unrealistic. Even if you were making 100k, a 250k house should be at the very top of your budget, and even then it’s stretching it if you want to save money. The first part of this assessment seems pretty true, but the second seems... really conservative. Even a $250K mortgage at 5% is a payment of $1342, vs. a monthly take-home of $5500-6300 (depending on state and local taxes). You have room there to max your 401K and IRA, sock away a couple hundred bucks a month for eventual maintenance and repairs, and still be spending comfortably under 25%-of-take-home on your mortgage.
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Oct 8, 2018 03:07
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Koivunen posted:Even if you were making 100k, a 250k house should be at the very top of your budget, and even then it’s stretching it if you want to save money. You've said this a couple of times before here, and I think you're being very conservative, even for this thread. $100k is ~$6k monthly take home. $225k 30 year mortgage (assuming 10% down) @ 4% PITI is ~$1500/mo, back of the napkin. That's very doable on $100k. Going back to his actual situation, $55k is tight. Given how frugal he is otherwise, it's doable, but the question is, are the benefits of owning this house worth signing yourself up to be that frugal for 30 years? Even if you're dead set on living alone forever, you may feel differently later, to say nothing about chronic medical situations or whatever. EDIT: Agreed that having some emergency fund left over is mandatory, no matter how good of shape the place you're moving in to is. Putting some amount into retirement is always a good idea too. Lowering it to save a down payment, sure, go for it. Don't 0 it out though. Grumpwagon fucked around with this message at 03:20 on Oct 8, 2018 |
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Oct 8, 2018 03:08
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QuarkJets posted:You don't have to max out your 401k and IRA, what I recommended is that you should at least max out your IRA (because it's a very flexible kind of account and the yearly cap isn't that high anyway) and consider contributing to your 401k. You may not be leaving money on the table in the form of an employer match, but you are leaving money on the table in the form of tax-advantaged retirement savings. It is pretty normal to eat beans and rice and not save for retirement for a grea months ti a year in order to buy something like s house. Not everyone is going to live like Homo Economicus. I agree that he should save a little for emergencies. A 10% down payment and a single premium PMI leaves him with a decent cashflow situation and then he can resume his retirement savings.
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Oct 8, 2018 03:17
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It's not impossible to own a $250k home on a ~$60k salary, but you need a big cushion of savings in order to do so safely (since you're already living frugally and don't have income that can absorb sudden emergencies). I didn't make much more than that when I bought in the low 300s, but I'm also in Southern California where home prices are high and property taxes are low, and I had 25% down. You're not doomed to living in your parents' house forever, but you'll be in a way better position financially if you keep saving for another year or so, and make getting those promotions you're talking about a priority. Unexpected closing costs can easily eat up a couple thousand dollars, and that's just to get the keys. You'll be shocked at how common it is for expensive things to break just after a home changes hands.
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Oct 8, 2018 04:21
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The numbers I write are definitely based on my own personal experience. After taxes, family health and dental, union dues, etc come out of my paycheck, my take home is significantly less than my gross pay. I like to be able to save a lot, like several hundred a month, which is why I’m so conservative with numbers. This habit has saved us when unexpected things have happened like expensive vet bills, having surgery and being out of work for four months, when the hot water heater exploded, etc. Also, if we ever want to do fun stuff like take a vacation or travel to see a concert, we can just do it, we don’t have to plan to save up to do it. I get that not everyone likes to save as much as we do, but it just seems crazy to me to spend so much of your income on a mortgage. A lot more happens in life than house related stuff.
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Oct 8, 2018 04:30
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Koivunen posted:I get that not everyone likes to save as much as we do, but it just seems crazy to me to spend so much of your income on a mortgage. A lot more happens in life than house related stuff. That's the thing, though, even considering that, your numbers are really low; they're way past 'oh, you can spend paycheck to paycheck if you want, but we like to save a few hundred dollars a month'. Counting 401k and IRA, a modestly frugal single person (or even a couple) making $100K and carrying a $200K-250K mortgage can save a couple thousand dollars a month without much heartache. Obviously the numbers get tighter if you're raising two kids with PTA donations, soccer dues, and all that.
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Oct 8, 2018 05:27
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Koivunen posted:The numbers I write are definitely based on my own personal experience. After taxes, family health and dental, union dues, etc come out of my paycheck, my take home is significantly less than my gross pay. I like to be able to save a lot, like several hundred a month, which is why I’m so conservative with numbers. This habit has saved us when unexpected things have happened like expensive vet bills, having surgery and being out of work for four months, when the hot water heater exploded, etc. Also, if we ever want to do fun stuff like take a vacation or travel to see a concert, we can just do it, we don’t have to plan to save up to do it. I forget where you said you are from... was it Detroit? People on or near the coasts simply have to spend proportionally more of their income on housing. I'm in the Portland area and you can't find a decent house in the less desirable suburbs for less than $300-$350k. Median household income here is 68k. Median home price in the metro area is north of $400k. I'm not saying that's affordable, but saying a $250k mortgage isn't doable on a 60k income is just silly to someone from the west coast. I can't imagine Long Island is any cheaper.
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Oct 8, 2018 07:06
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TwoSheds posted:I’m looking into buying a property and have some questions. Here’s the skinny: Should you buy a 279k home now with 55k salary and 32k saved, not unless you are comfortable putting more than half your take home pay towards housing for the foreseeable future. But it depends on your personal finances. If you have no other debt, minimal living expenses like transportation you could get approved for a mortgage. 55k is about 3500 take home a month in ny. Your payment on 279k is about 1800 a month for mortgage, insurance and taxes with 10% down. 32k is not enough to cover closing costs and put down 10%, but there may be first time home buyer programs that give down payment assistance. With 20% down it is closer to 1500 a month, and with 3.5% down FHA it is about 2000. There are more out of pockets costs with owning a home than owning a condo(or renting). You are not sharing maintenance costs with anyone else, and your utilities are generally higher. Replacing a roof, or furnace is usually 10k+, and not covered by insurance. With 10% down or less, if the home prices drop at all you cannot afford to sell, and with it costing half your income you can't afford to move either. You pay about 7 percent in closing costs to sell a home. With less than 10% down the interest rate is higher and you are paying a lot in pmi. Shop around for a mortgage. 20% down is the common wisdom, but with 10-15% down you can get competitive rates and pmi is cheaper than with less than 10%. Don't base a home purchase on a raise that may never come. Even if you are in a union or have a contract that guarantees a raise a lot can happen.
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Oct 8, 2018 09:05
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therobit posted:It is pretty normal to eat beans and rice and not save for retirement for a grea months ti a year in order to buy something like s house. Not everyone is going to live like Homo Economicus. I agree that he should save a little for emergencies. A 10% down payment and a single premium PMI leaves him with a decent cashflow situation and then he can resume his retirement savings. We weren't talking about what was normal, we were talking about what was a good idea. Simply cutting your retirement contributions to 0% in order to save for a house is a bad financial decision, simple as that
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Oct 8, 2018 12:41
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I would think whether you can afford a $250k house on $60k would depend almost entirely on the variable costs of your area and how able you are to fix things yourself. Property taxes, state income tax, homeowners insurance rates, car insurance costs, and not having to pay professionals for home repair issues could change a budget forecast by $10,000/year from an extremely expensive location to a cheap one. Are property taxes on this place going to be $1,500 or $9,000?
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Oct 8, 2018 12:59
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Koivunen posted:The numbers I write are definitely based on my own personal experience. After taxes, family health and dental, union dues, etc come out of my paycheck, my take home is significantly less than my gross pay. I like to be able to save a lot, like several hundred a month, which is why I’m so conservative with numbers. This habit has saved us when unexpected things have happened like expensive vet bills, having surgery and being out of work for four months, when the hot water heater exploded, etc. Also, if we ever want to do fun stuff like take a vacation or travel to see a concert, we can just do it, we don’t have to plan to save up to do it. If I were to apply your advice to my state on a proportional basis, you’re arguing that something like 4% of households should own the property they inhabit. That’s more than an order of magnitude different than the average across the country.
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Oct 8, 2018 16:38
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Droo posted:I would think whether you can afford a $250k house on $60k would depend almost entirely on the variable costs of your area and how able you are to fix things yourself. Property taxes would be close to 9k. So the feedback I'm getting is that the house is a monumentally stupid idea. I've mentally abandoned it, but I just saw a co-op that seems too good to be true. Same town I'm in now, and in an amazing area, 139k asking price, 1bd, 1 bath. Pictures look great, but obviously I would be checking it out firsthand. Monthly maintenance is about 600/ month, that also comes with a parking spot. Not sure about heat, but the listing says that electricity is separate. Obviously this is BETTER, but is it a good idea for me with the numbers I provided earlier?
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Oct 8, 2018 16:55
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TwoSheds posted:Property taxes would be close to 9k. Wow, I would not be buying a $250k place with $9k in property tax on anything less than $80k in salary and even then it would be hard to justify. And to be honest I'm not sure whether that coop with $600/month in fees plus more in property tax is actually better or worse than the house with $750/month in property tax. Why don't you just move out into a nice apartment for awhile? What would rent cost for a place similar to this coop (which is going to cost you close to $2000/month all in).
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Oct 8, 2018 17:09
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Droo posted:Wow, I would not be buying a $250k place with $9k in property tax on anything less than $80k in salary and even then it would be hard to justify. And to be honest I'm not sure whether that coop with $600/month in fees plus more in property tax is actually better or worse than the house with $750/month in property tax. Doesn't monthly maintenance usually include property tax?
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Oct 8, 2018 17:12
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TwoSheds posted:Doesn't monthly maintenance usually include property tax? Nope.
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Oct 8, 2018 17:20
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H110Hawk posted:Nope. I don't mean to be obstinate, but are you absolutely sure? I just checked a few different and they all said that monthly maintenance includes property tax for co ops.
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Oct 8, 2018 17:25
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I think you are on a job track that includes increasing income. When you have worked through those rapid increases in income you'll have something more solid on which to base your planning for the next 7-10 years. You could also consider moving to a lower cost of living part of the country? We don't know what you do for a living but many careers are portable. New York City is a really expensive place to live and most people who buy in that area have dual incomes and often both being higher.
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Oct 8, 2018 17:29
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TwoSheds posted:I don't mean to be obstinate, but are you absolutely sure? I just checked a few different and they all said that monthly maintenance includes property tax for co ops. Oh maybe not, ask a realtor actually. I was thinking HOA maintenance. Sorry about that.
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Oct 8, 2018 17:31
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Leperflesh posted:
Long Island is a hell of a place to try and own in now adays. Is work on the island, or in the city? Because I would personally advise getting the heck out of LI. It's overpriced. My dad sold our home in Bellmore in 2009, and bought 3 houses and a condo down here in florida. Suspect Bucket fucked around with this message at 17:44 on Oct 8, 2018 |
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Oct 8, 2018 17:32
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Suspect Bucket posted:Long Island is a hell of a place to try and own in now adays. Is work on the island, or in the city? Because I would personally advise getting the heck out of LI. It's overpriced. I had a similar plan for retirement, albeit with one significantly cheaper property and not a fleet of rentals, but not now. My company is unique to Long Island, and any career opportunities would also be on the coasts.
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Oct 8, 2018 18:02
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therobit posted:I don't think his plan to buy is as disastrous as you all seem to. This thread is super conservative, but depending on the market he is in it could be a better decision to buy. I would hold back at least 5k for emergencies. Most of America does not have any kind of emergency fund, so insisting on a Dave Ramsey level of emergency savings before someone decides to fix a significant portion of their housing costs for the next 30 years and acquire an asset that is likely to appreciate in the long term is a little silly. Yes there are risks but for most people, most of the time it works out just fine to scrape together a down payment and buy something. e: but a 3.5-4% effective tax rate is crazy.
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Oct 8, 2018 18:35
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Suspect Bucket posted:Long Island is a hell of a place to try and own in now adays. Is work on the island, or in the city? Because I would personally advise getting the heck out of LI. It's overpriced. Good thing he got out when he did. Sandy hosed Bellmore hard.
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Oct 8, 2018 18:37
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edit: vvv Thanks! Post moved.
gregday fucked around with this message at 21:04 on Oct 8, 2018 |
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Oct 8, 2018 18:40
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Wrong thread. Use the home ownership thread.
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Oct 8, 2018 19:31
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Jealous Cow posted:Good thing he got out when he did. Sandy hosed Bellmore hard. We were North Bellmore. Southies got what was coming to 'em with their fancy houses and blatant disregard for the ocean's fury! I kid, we were always jealous of south bellmore. TwoSheds posted:I had a similar plan for retirement, albeit with one significantly cheaper property and not a fleet of rentals, but not now. My company is unique to Long Island, and any career opportunities would also be on the coasts. Floating bagel salesman?
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Oct 8, 2018 22:22
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Suspect Bucket posted:
That's closer than I dare admit.
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Oct 8, 2018 22:35
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Just a theoretical here: let's say I own 2 rental properties right now, and I am looking to buy a 3rd. All of the mortgage lenders are telling me that they'll only count each of my rentals as income (in order to have enough income to qualify for affording this 3rd mortgage) if I can show I've been paying taxes on the rental payments for at least two years of tax returns. I haven't done my 2017 taxes yet (I filed an extension so they are due in a week). If I wanted to acquire a 3rd rental property as soon as possible, and since my rentals have been paying me in cash for about a year so far (no way to prove exactly how long they've been renting), could I fib and overpay on my taxes (i.e. tell IRS I've been renting these places since Jan 2017, paying the IRS extra income tax) in order to convince the underwriter to let me buy a 3rd rental a year earlier than I otherwise could have? Some quick math says I'd be paying the IRS an extra $20000 that I don't really owe, but buying a 4th rental a year early would net me about $80000 in extra rental income for the year that I otherwise wouldn't have gotten. Would I go to prison for a stunt like that, or would the IRS turn a blind eye to extra money?
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Oct 9, 2018 09:47
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Oh my god zero if you have a question that includes that last line, ask a lawyer, don't ask random goons in the wrong thread (legal advice is probably a better place, but still wrong)
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Oct 9, 2018 11:13
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Your hypothetical sounds an awful lot like fraud
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Oct 9, 2018 11:17
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QuarkJets posted:Your hypothetical sounds an awful lot like fraud A lot of what he does sounds like fraud, we mostly tell him to stop committing crimes and to stop posting about committing crimes in the Boston thread.
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Oct 9, 2018 11:21
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Zero VGS posted:could I fib fraud
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Oct 9, 2018 11:38
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Zero VGS posted:Would I go to prison for a stunt like that, or would the IRS turn a blind eye to extra money? You're only thinking about half the question here; the IRS may not catch you or even care if you are willfully over-paying taxes, I imagine that isn't super high on their list of things to examine. But if you're using this overpayment as a way to misrepresent your rental income history, you're breaking the law in respect to your loan application and that is it's own separate issue that is both a crime and a reason for the bank to gently caress you. This is the same thing as when people lie about getting a loan from their family to afford a house: 18 U.S. Code § 1014 posted:Whoever knowingly makes any false statement or report... for the purpose of influencing in any way the action of ... any institution the accounts of which are insured by the Federal Deposit Insurance Corporation... upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, loan, or insurance agreement or application for insurance or a guarantee... shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. Will you be caught for doing this? I dunno, maybe not, possibly you will be one of the people who manage to coast by on this. On the other hand, you are basically taking that risk for the sake of saving yourself a single year before you buy another house, and possibly $60,000. How risky do you like to live? Fake edit: You can ask the legal questions thread, they love it when people ask them before committing crimes because that is literally the only time they can give you bulletproof advice that will definitely help you (the advice is don't plan to do crimes).
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Oct 9, 2018 14:44
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Zero VGS posted:Just a theoretical here: let's say I own 2 rental properties right now, and I am looking to buy a 3rd. All of the mortgage lenders are telling me that they'll only count each of my rentals as income (in order to have enough income to qualify for affording this 3rd mortgage) if I can show I've been paying taxes on the rental payments for at least two years of tax returns. While the IRS probably won't care that you overpaid, that lie becomes mortgage fraud once you use it on a mortgage application. But you should really be talking to your accountant and lawyer, which you should definitely have if you already have 2 rental properties and are planning to go up to 4.
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Oct 9, 2018 14:47
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Well I think he should just go for it.
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Oct 9, 2018 14:54
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