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Message
re: Question about using fiancée's income when buying a home
Posted on 9/6/13 at 7:43 pm to LNCHBOX
Posted on 9/6/13 at 7:43 pm to LNCHBOX
quote:
She is a fresh college graduate. She has an extensive work history, but has only been in her career job since she graduated. I don't see the issue here either, everyone starts somewhere.
The issue and their point is why on earth do you need to find out the absolute minimum requirements in order to do your plans.
Why do you feel the need to buy a house so quickly? Just because you can?
I understand not waiting to pay off the loans before getting the house but why aren't you staying put in your current situation for a year or so just to build a down payment or aggressively attack loans.
Also will allow savings to be established to handle the post purchase costs of buying a home....furnishing and decorating it.
1
Posted on 9/6/13 at 7:46 pm to LNCHBOX
quote:
This is true, and while I'd like to be able to wait. I'm not letting $150 a month for a few years keep me out of a house.
That is a lot of sugar coating on a 30 thousand dollar non equity liability that you will have to pay.
Posted on 9/6/13 at 8:14 pm to Volvagia
We moved home from Baton Rouge after she graduated and are currently living with my parents. Do I really need to explain why we want out? Lol.
It's not about the bare minimum. I could get financed for a house on my own. I would however like to be able to buy more house using my fiancée's income, I don't really see the issue.
We have most of the furnishings and decorations from our rental in br, so that's not a real issue for us. And at this point, I'd rather buy then pay rent to someone again. We know we are going to be here long term, so renting has zero appeal to me when I can pay almost the same amount to own the home.
It's not about the bare minimum. I could get financed for a house on my own. I would however like to be able to buy more house using my fiancée's income, I don't really see the issue.
We have most of the furnishings and decorations from our rental in br, so that's not a real issue for us. And at this point, I'd rather buy then pay rent to someone again. We know we are going to be here long term, so renting has zero appeal to me when I can pay almost the same amount to own the home.
Posted on 9/6/13 at 9:00 pm to LNCHBOX
quote:
Do I really need to explain why we want out? Lol.
No. But you ask the money board the question - collectively we're pretty savvy about money. We're telling you the right money answers, not necessarily the right life answers.
quote:
It's not about the bare minimum. I could get financed for a house on my own. I would however like to be able to buy more house using my fiancée's income, I don't really see the issue.
The issue is - you're overextending yourself at the worst possible time - every bad money decision you make now (and I know, I made hundreds of them) reverberate for DECADES. You know what else is true? Good ones do, too.
quote:
And at this point, I'd rather buy then pay rent to someone again.
And I understand that, but you need to understand that renting for a year or two, if the price is right (or heaven forbid, live with your parents another year) may be a smart decision that pays dividends until you die.
That's all we're saying. Two income couples should always be able to completely live on one income and save/invest the other. Not always possible, but that should a budgeting goal - even if you only do that for 4 or 5 years, the habits you develop and this "third income" (the yield on what you saved for 4 or 5 years) can literally be the difference between retiring wealthy or not.
Posted on 9/6/13 at 11:55 pm to LNCHBOX
It sounds like you're wanting more than the two of you can afford.
Why do you want both of your incomes being dumped into "more house", especially if it's just the two of you (no kids yet).
PLUS you have student loans that need to be paid off? I think I'd want to get those paid off as quickly as possible and live in the smallest/cheapest home available.
Why overextend yourself when it's just the two of you. You really only need one bedroom.
And not much of a down payment to start with??
Why do you want both of your incomes being dumped into "more house", especially if it's just the two of you (no kids yet).
PLUS you have student loans that need to be paid off? I think I'd want to get those paid off as quickly as possible and live in the smallest/cheapest home available.
Why overextend yourself when it's just the two of you. You really only need one bedroom.
And not much of a down payment to start with??
This post was edited on 9/6/13 at 11:57 pm
Posted on 9/7/13 at 12:47 am to LNCHBOX
quote:
We moved home from Baton Rouge after she graduated and are currently living with my parents. Do I really need to explain why we want out? Lol.
No one is faulting you for wanting to move out from the rents, but there's nothing wrong with renting for a year or two. Quite frankly I don't know why more young couples don't do this. Every friend of mine who got married young bought these ridiculous houses on the outskirts of BR because they wanted "more house".
Why the hell do you need more house for the 2 of you? I don't understand why more young couples don't get 1 BR apartments downtown. I haven't lived in BR in ages, but is there nowhere cool yal could rent for a year or two that would have decent stuff around for yal to do.
You sound young. Why do you want to move to the burbs so quick?
quote:
It's not about the bare minimum. I could get financed for a house on my own. I would however like to be able to buy more house using my fiancée's income, I don't really see the issue.
Again, why do you need more house? There's nothing wrong with a starter house. Most people live in 3 houses throughout their lives, why do you need a big one to start?
I got 2 sets of pretty good group of friends from growing up and then from college. In each of the groups, whenever we have reuinions or meet-ups somewhere, the only people who say they can't afford it are those who are married.
Now I don't know if their wives really just hate us, but I suspect it has more to do with them having these ridiculous mortgages to pay. You have 2 incomes, if anything the married couples should be the ones wanting to go on these extravagent trips the single guys can't afford.
I don't think it makes financial sense and it definitely doesn't make fun/social sense for yal to be using both your incomes to get a bigger house when you also have loans to pay back. Don't make yourself poor bro. Be young, be a newleywed, have fun and get a bigger house later.
Posted on 9/7/13 at 7:05 am to LNCHBOX
You may not have many expenses not since you live with your folks and all. But once you get a house and get married they start adding up quick. What you think I extra money will be gone. Especially if you have kids anytime soon. Even if you don't that mortgage will be the same in 5-10 years. Don't think once you get into that house your wife is going to be happy with all the old crap you had in your apartments either. She going to want new curtains and furniture and everything else. It's expensive. I speak from experience. I wish everyday I would have just paid off my loans and lived more poor a couple more years because now that I've got kids and a house it definitely not gonna happen. Not that I can't afford them, but it would be a nice chunk of extra money. Wish the MT board was around when I was ur age. I've made it through ok but learned a lot in the process that would've changed what I did if I'd have known then.
Posted on 9/7/13 at 7:31 am to FootballNostradamus
quote:
No one is faulting you for wanting to move out from the rents, but there's nothing wrong with renting for a year or two. Quite frankly I don't know why more young couples don't do this. Every friend of mine who got married young bought these ridiculous houses on the outskirts of BR because they wanted "more house".
My wife and I will be in our 30s before we buy our first home. Allowed us to get quite a nice amount saved away, and we avoided buying a house in 2006 when everyone was telling us to buy.
Posted on 9/7/13 at 1:20 pm to The Easter Bunny
quote:
My wife and I will be in our 30s before we buy our first home. Allowed us to get quite a nice amount saved away, and we avoided buying a house in 2006 when everyone was telling us to buy.
Nothing wrong with that. Not sure why the current generation is in such a rush to buy a house and feel they've made it. Live young, fun, and poor for a little longer. It'll pay off in the end.
Posted on 9/7/13 at 3:33 pm to Ace Midnight
quote:
The issue is - you're overextending yourself at the worst possible time - every bad money decision you make now (and I know, I made hundreds of them) reverberate for DECADES. You know what else is true? Good ones do, too.
Heed all of Ace's advice. He knows his stuff.
Here is how we bought our first home:
Saved $20k, no debt, on one income while one of us was still in school. Used 1st time homebuyer program, EBR Parish bond money, for down payment assistance. That way we still had cash on hand to replace a big ticket item like an air conditioner.
Found a fixer-upper in a really good neighborhood and did most of the work ourselves with cash a little at a time. Over seven years, it nearly doubled in value. We then had 85k to put towards a newer house.
Let's say the two of you combined make 100k/year. Live on 40, pay off your student loans in one year while living in an $1100/month rental. Year Two, you save 60k and have your 20% down payment plus a decent amount of cash. Then, you buy the 200k house.
Also, why deal with yardwork, honey-do lists etc when you are young, childless and still want to go out and have fun on the weekends? Take it easy and enjoy your marriage for the first few years.
Posted on 9/7/13 at 4:53 pm to pottymouth
quote:
Let's say the two of you combined make 100k/year. Live on 40, pay off your student loans in one year while living in an $1100/month rental. Year Two, you save 60k and have your 20% down payment plus a decent amount of cash. Then, you buy the 200k house.
What kind of crazy math are you doing here to think this is any kind of remote possibility? If life was a fantasy world like your scenario here, then you I'd do that.
Posted on 9/7/13 at 5:14 pm to LNCHBOX
quote:
We have most of the furnishings and decorations from our rental in br, so that's not a real issue for us. And at this point, I'd rather buy then pay rent to someone again. We know we are going to be here long term, so renting has zero appeal to me when I can pay almost the same amount to own the home.
Renting for a year could get you out of PMI payments though
So you can pretty much blow the whole "paying rent to someone" logic out of the window. You're "throwing money away" on PMI just as much as you would be on rent.
Posted on 9/7/13 at 6:11 pm to Powerman
quote:
Renting for a year could get you out of PMI payments though
I'm not seeing how paying more than I am right now to rent is going to help me get out of PMI in 12 months? I'd need $40,000 at least, and lets just say I'm not anywhere near that in the down payment funds.
Posted on 9/7/13 at 7:26 pm to LNCHBOX
Yeah, it is kinda crazy because I forgot taxes. That is gross not net income. I was assuming two college degrees or one degree, one skilled trade 3 years in. So scale that 40/60 ratio down to your circumstances and figure out how long to get out of debt and build up sufficient cash.
But, and I'm sorry for this, but is it any more crazy than wanting to buy a suburban family home when making less than 100K gross and towing a boat-load of student loans? Average student loan debt of 27K and average credit card debt 8K plus $600 or so in car payments PLUS a $1000/month house note really puts you behind the eight ball.
Look into bond money if you are still on fire about owning your own home. The income and home value requirements are clearly spelled out and there is a list of lenders to shop from. All you have to do is meet with CCCS to put together a written budget.
If I had to do it over again, though, I would not have used the program. We could have come up with 20% down and not paid PMI had we saved another year. The rate was a 1/2 point higher than a conventional 30 year. While we did increase the value of the home, we spent more than we had to in order to do it.
And for goodness sake, have a cash reserve with which you can pay two of any of these three at one time: a new air conditioner, a new roof, or the named storm deductible. Because, Murphy's Law...
But, and I'm sorry for this, but is it any more crazy than wanting to buy a suburban family home when making less than 100K gross and towing a boat-load of student loans? Average student loan debt of 27K and average credit card debt 8K plus $600 or so in car payments PLUS a $1000/month house note really puts you behind the eight ball.
Look into bond money if you are still on fire about owning your own home. The income and home value requirements are clearly spelled out and there is a list of lenders to shop from. All you have to do is meet with CCCS to put together a written budget.
If I had to do it over again, though, I would not have used the program. We could have come up with 20% down and not paid PMI had we saved another year. The rate was a 1/2 point higher than a conventional 30 year. While we did increase the value of the home, we spent more than we had to in order to do it.
And for goodness sake, have a cash reserve with which you can pay two of any of these three at one time: a new air conditioner, a new roof, or the named storm deductible. Because, Murphy's Law...
Posted on 9/7/13 at 8:15 pm to LNCHBOX
quote:
I'm not seeing how paying more than I am right now to rent is going to help me get out of PMI in 12 months? I'd need $40,000 at least, and lets just say I'm not anywhere near that in the down payment funds.
That's kinda the point.
The fact that even with a year of dedicated savings, you can't reach that level.
And yet you want to find out what lenders need to know about your fiancé to buy "more house."
This board is really conservative about financial choices....but even ignoring that metric you are apparently making a bad move.
Maybe not one that will cripple you, but one you could be a "LOT" better off if suck it up.
Especially considering your earlier statement about how you would be paying that in rent anyway.
Well, if you don't make a good down payment most of your early monthly payments will be interest anyway.
A cost not building equity.
And compound that with the fact that you aren't really liable for repairs while renting like you are in a house....
Posted on 9/7/13 at 8:43 pm to Volvagia
quote:
This board is really conservative about financial choices....but even ignoring that metric you are apparently making a bad move.
If you're not conservative with your finances you're doing it wrong.
Posted on 9/7/13 at 9:23 pm to Volvagia
quote:
That's kinda the point.
Not sure how that makes it a point.
quote:
The fact that even with a year of dedicated savings, you can't reach that level.
How many people do you know could save $30,000+ in one year off $100k gross paying $1100 just in rent? You would have to have almost zero living expenses after paying utilities, gas for car, groceries, and be making only small contributions to retirement. And all that assumes no loans of any kind.
quote:
And yet you want to find out what lenders need to know about your fiancé to buy "more house."
Why would I waste my time buying a house that I would need to upgrade when I have two kids if I could buy a house that would handle that from the get go? And it's not like I want to spend a fortune on my house, I just want to make sure I qualify for the best rates. DTI makes an impact on that.
quote:
This board is really conservative about financial choices....but even ignoring that metric you are apparently making a bad move.
How exactly is it a bad move when we will be staying here long term? Would I really be better off paying $1200 in rent versus $1500 (which includes the PMI) to own? I just don't see how that could possibly be better. Especially since when you look at the amortization, I pay almost $300 towards principal from the get go, even on a 30 year note. So how exactly is it a bad move to basically break even at worst?
quote:
Maybe not one that will cripple you, but one you could be a "LOT" better off if suck it up.
At what point is the amount of years that it would take to get to this board's minimum threshold to buy a house does it become an exercise in diminishing returns?
quote:
Well, if you don't make a good down payment most of your early monthly payments will be interest anyway.
Not really sure what your point is here. That is true regardless of how much you put down.
quote:
A cost not building equity.
From the get go on a 30 year note, almost 20% goes to principal fro the first payment (including homeowners and PMI). That's more equity than I'd be building while renting. Again, how is renting better?
quote:
And compound that with the fact that you aren't really liable for repairs while renting like you are in a house....
I'm very handy as is my dad, not really concerned about this at all. Not much you can't fix with a good set of tools and a youtube video.
Bottom line, I didn't really ask for all this advice. I'm an engineer, so I can understand all the cost and decide what's best for my personal situation. In a perfect world, sure all student debt would be paid off and I would put 20% minimum down. Here in my world, that's not an option. I'm pretty sure I got what I need out of this thread, so I'll start looking for the right house for us in 6-8 months. I appreciate y'alls advice, really I do.
Posted on 9/7/13 at 9:47 pm to LNCHBOX
quote:
How many people do you know could save $30,000+ in one year off $100k gross paying $1100 just in rent? You would have to have almost zero living expenses after paying utilities, gas for car, groceries, and be making only small contributions to retirement. And all that assumes no loans of any kind.
I mean it's not insane. You're paying $1100 a month in rent so let's say utilities run about $500 a month so now you're looking at basically $20K of your $100K gone for living expenses (we're assuming $100K is takehome pay in this example not pretax).
Throw in $100 a week, hell let's make it $200 a week just to be conservative for groceries, and that deducts $10K a year so now you're left with $70K of the original $100K. Cell phone and gas probably hits you $500 a month (no idea yal's commuting/driving lifestyle) so that deducts $6K leaving you with $64K.
If you're trying to save $30K a year you now have $34K of available money for "living". This is almost $3K a month. That's basically $600-700 a week on movies, restaurants, trips, whatever.
It's a lot easier to save than people think. It sucks to get in the habit of it and be disciplined, but it's more than doable.
quote:
Why would I waste my time buying a house that I would need to upgrade when I have two kids if I could buy a house that would handle that from the get go? And it's not like I want to spend a fortune on my house, I just want to make sure I qualify for the best rates. DTI makes an impact on that.
How do you know you'll be in BR forever? Do you have some job/career that's central solely to BR? Tons of people move these days, you never know where you'll be.
quote:
I'm very handy as is my dad, not really concerned about this at all. Not much you can't fix with a good set of tools and a youtube video.
So get a small fixer-upper in a decent neighborhood. You live with your parents so you could buy it, continue to live with them and fix it up for 6 months. If you didn't want to do that you could move in right away and fix it up as you go.
Your wife won't have a huge house to clean as a new graduate. It will likely increase more in value with the improvements than some bigger house out in the pop-up suburbs (just my opinion), and then you can upgrade when you need to.
Best of luck with your choices. Like someone said, most on this board, including myself, are beyond conservative when it comes to finances. Nothing you're saying is wrong, just different schools of thought is all
! I will say, yal need to make a realistic budget and see that even with a $1.1K rent yal could still absolutely save $20-30K a year if you're responsible. If you have student loans, you can absolutely pay a huge chunk of them with the 2 salaries.
Posted on 9/7/13 at 10:21 pm to FootballNostradamus
Well we don't make 100k net, so throw all that out the window.
We moved from br to Nola, and we will be here for the rest of our lives. Family is here, where we want to grow old is here. . If we were still in br, this wouldn't be an issue because I could get a nice house for $140k. Just can't do that in the Nola area and be in any kind of decent location.
We have budgeted to pay them off in about 5 years, including buying a house sometime in the next year. I know it's not ideal.
quote:
How do you know you'll be in BR forever? Do you have some job/career that's central solely to BR? Tons of people move these days, you never know where you'll be.
We moved from br to Nola, and we will be here for the rest of our lives. Family is here, where we want to grow old is here. . If we were still in br, this wouldn't be an issue because I could get a nice house for $140k. Just can't do that in the Nola area and be in any kind of decent location.
quote:
I will say, yal need to make a realistic budget and see that even with a $1.1K rent yal could still absolutely save $20-30K a year if you're responsible. If you have student loans, you can absolutely pay a huge chunk of them with the 2 salaries.
We have budgeted to pay them off in about 5 years, including buying a house sometime in the next year. I know it's not ideal.
Posted on 9/7/13 at 10:30 pm to LNCHBOX
quote:
How many people do you know could save $30,000+ in one year off $100k gross paying $1100 just in rent? You would have to have almost zero living expenses after paying utilities, gas for car, groceries, and be making only small contributions to retirement. And all that assumes no loans of any kind.
Well, I've done it grossing 60. Heck, I could probably do it grossing 50. You have to decide if you want to build real wealth and be truly comfortable or are you gonna do what all the other broke people do and just get by.
I have a friend who makes three times as much as I do, and yet I have double the net worth. I pay cash for new but modest cars, she leases luxury SUVs for the status. I will own my home outright in 5 years, she walked away from an underwater mcmansion and ruined her credit.
Dave Ramsey can be a dbag, but his "live like no one else..." platitude is pretty spot on. That and don't take money advice from broke people. And the borrower is the slave to the lender.
Over all, it sounds like you two are going to have good jobs and steadily increasing incomes, so if anything does go awry, you can work your way out of it. Best of luck with the wedding and in your new life together!
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