Can I afford to buy my grandmothers house?

[BigToque]

My grandmother recently passed away and now the house is going to be sold.

My father, aunt and uncle think it's a good idea for me from the perspective that it's a step in the right direction in taking on some responsibility, but only if it's something I can afford.

My family agreed to sell me the house at market value ($220,000)

I am 27, currently have $20,000 in debt (that I hope could be rolled into the mortgage) and I am working full-time making $32,000 a year (gross) and also going to university.

I make $2000 a month after tax, and I figure the mortgage would be about $1500.
From what I understand, with all the utilities and taxes and my food, I'd be looking at about $2500 a month all in.

There are 2 basement suites that I intend to rent out for $500 each which would give me $3000 a month to work with. (This house is close to the university and don't think I should have too much trouble finding 2 tenents).

Does this sound like a bad idea? Would a bank laugh at me and tell me to get out of their office?

 

[CRXican]

I would laugh at you. Is the house paid off?

 

[zerocool84]

Yes they would laugh at your face. You won't even have enough money to live if you buy the house plus you already have a shitload of debt. Horrible idea.

 

[eldorado99]

Wasn't there already a thread with the exact same name not too long ago?

 

[Mojoed]

Originally posted by: BigToque
My family agreed to sell me the house at market value ($220,000)

That's very nice of your family, to sell it to you for market value.

 

[zerocool84]

Originally posted by: eldorado99
Wasn't there already a thread with the exact same name not too long ago?

If I remember it was slightly different.

 

[Iron Woode]

you should concentrate on paying off your primary debt before buying a house and getting even deeper in debt.

once that is paid off, go find a cheaper starter house and then move on as time and money allow.

 

[AlienCraft]

Originally posted by: Mojoed

Originally posted by: BigToque
My family agreed to sell me the house at market value ($220,000)

That's very nice of your family, to sell it to you for market value.

Somebody's gettin' played.

 

[LTC8K6]

Your family doesn't like you.

 

[Mardeth]

You cant afford it, not even close.

 

[Leros]

You're only making $32k a year and you want to buy a $220k house? Terrible idea.

 

[jlee]

Originally posted by: Mardeth
You cant afford it, not even close.

This.

What happens when your tenants don't pay their rent on time - or don't pay at all?

 

[chuckywang]

You just answered your own question with your post.

 

[Kirby]

$240k in debt with income of $32k is madness.

 

[Wheezer]

Bank loan no...my suggestion would be to see if your family will do a land contract with you.

You can make payments diretly to them for X number of years, until you are more stable.

Negotiate with them an interest rate, try to do 1/2-3/4 what the banks are offering right now, draw up a contract, offer to split the cost of any attorney fees and a percentage of down payment.

the other option is to rent it from them, but no...a bank is not going to give you a loan....3-4 years ago when they were giving every Tom, Dick and Harry a loan?....maybe, now...no way.

 

[caspur]

Actually, I'm going to disagree with the above posters and say that you can afford it.

The advantage of having a "mortgage" with your own family is that there is no interest...ie you don't have to go through a bank and get a real mortgage. That is assuming the house is already paid off...basically you just transfer the title (no realtor's fees) and you just pay your family back over time. If the house is not paid off, this doesn't work. The lender will require a refinance, which in this case you would not qualify for based on your income.

 

[EGGO]

Originally posted by: Mojoed

Originally posted by: BigToque
My family agreed to sell me the house at market value ($220,000)

That's very nice of your family, to sell it to you for market value.

I know. Those who'll be buying the house can get it for much less. Maybe 8% less.

 

[wiredspider]

I'm not the bank, but I'm already laughing at you.

You are $20k in debt with no down payment, why would the bank give you over 100% of the house value? Unless your family agrees to a lower price, don't do it.

 

[theprodigalrebel]

DANGER! SIRENS! RED FLAGS!

 

[gururu2]

I wouldn't do it. First of all, they aren't cutting you any breaks for being in the family and willing to keep granny's legacy alive. Second, business with family will have you tar and feathered in no time. You are young and in school, keep it that way.

The only way I would seriously consider it is if you hired a lawyer to draw up a contract that protected you from every family dispute and if you were NOT required to finance the loan. That is, the loan was based on a good faith agreement, so you wouldn't have to pay interest. Also be careful, because this might appear to be a large gift, through which you would have to pay taxes.

Overall, I'd say don't do it. You were willing to keep grandmas house, but noone else in the family stepped up to the plate.

 

[rudeguy]

Originally posted by: theprodigalrebel
DANGER! SIRENS! RED FLAGS!

 

[RaistlinZ]

Worst. Idea. Ever.


Your family members really must dislike you to try and put you in that position. And why in the world would you even think of buying the home at market value? They probably can't get market value from you know, the market itself.

 

[Wonderful Pork]

I wouldn't do it unless it was a real mortgage through a bank to keep family issues & potential bad blood out of the equation.

That said, I don't think you can afford it. Do you plan on staying in the same location after you finish university?

 

[PlasmaBomb]

That's nearly 7 times your income... more if you include your debt...

What does a realtor value the house at? or is that where the 220k came from?

 

[PottedMeat]

Just let the local golf pro buy it at an IRS auction, then beat him in a tournament to win it back for the family.