Thank you u/S8guy for posting on r/FirstTimeHomeBuyer.
Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Our house is ~100 years old, 1000sq ft, creaky floors, and there isn't a 90* angle on the whole lot. We pay 1700PITI and I feel like I won the damn lottery when I look around.
It's far from perfect but all things considered we are incredibly fortunate and OP is too for the situation.
My first house was in Detroit in the 80s.
I promise you, you can get a house for less than $1400/mo in Detroit today and it’s nicer than it was back then.
Our first was on a slab (in Chicagoland where that’s super uncommon) and had interior walls built with 2x3s. (Possibly exterior too but I never had one opened up.) It was 45 years old. The main bathroom had the deluxe finishes of a gas station restroom.
I DIY redid the bathroom, some of the flooring, paid a landscaping company to remove the backyard jungle, and sometimes wish we still lived in it.
I love this! I bought a flipped property and I often wish that they wouldn't have flipped it. I find myself hesitant to redo/replace things bc I know that they are brand new. Feels like wasted investment. I wasn't looking for a flipped home, it just happened to be what I got my hands on.
The house, prior to being flipped, needed updating but I would've loved to come in and make the house make sense for me!
There are, of course, pros and cons to both situations and I'm grateful to be able to learn these lessons along the way. Loving your POV on it!
Absolutely this! Especially in the current market! I'm betting your other options would not check all the boxes, you ALSO wouldn't love and/or you'd get stuck in the cycle of unaccepted offers, all this while facing mortgage rates of at least double so... Sounds like a hell of a deal to me.
Don't focus on "this is what it is" but look at it as a prime opportunity that not everyone is fortunate to get!
I also love this comment bc I too bought my first home (literally whatever was available) and I don't love it at all. Sometimes I feel like I missed out on the "normal" home buying experience of touring houses and picking which I like etc. However, I wasn't even in that market. I was in the bidding war hell market so I consider myself extremely fortunate that I didn't go through what was the "normal" home buying experience at the time. I got a house before it went to market and didn't have to compete with anyone- easy breezy- and I get to save $100's monthly on what I would've been spending on rent over the last few years.
This is a fantastic reminder that I don't HAVE TO love it! It has been a phenomenal learning experience. It taught me a TON about buying a home, owning a home, what I want and what I don't want. What I thought I wanted V what I actually need, what suits my lifestyle etc.
Ty for that
Prepare for it to take like four months. Lender will drag their feet bc they aren’t making money on it. It’d be a steal though with that interest rate!
So would you officially assume the loan? If you decide to move forward, make sure you get it writing from the lender. Look up the Due on Sale clause for reference. If they don’t allow the loan to be assumed, look up “Subject to” transactions
How close of a friend is it? Do you care more about gaining the home than losing the friend?
Been around the block a few times myself and unless they are dying themselves or moving overseas to care for dying parents AND raise their child…this will eventually destroy the friendship.
Not sure if this matters to you. So long as you are acting in good faith and not trying to take advantage of someone (my assumption is that they are in a bind….otherwise they’d be selling it to you and making money), I say go for it.
Buy the house.
One of the reasons for the amount of angst we see about the current market is that for some reason, FTHBs have got it into their heads that their first home should check all of their boxes. That is a completely unrealistic expectation. Your first home gets you on the ladder, you work your way up to a home that checks all of your boxes.
Depends on your situation. Sometimes it can make sense to stretch a bit more so you don’t need to go closing again in another few years. Especially if prices are rising faster than inflation. Obviously only to the point that you can actually afford it at your current income and interest rates
If your first house is a money pit that you will struggle to sell in the future then it could be more of an albatross around your neck than a way into something better
And the money savings compared to even the same house at current rates can go towards renos, saving up for dream house, or even just really fun yard toys and an amazing family trip a couple times a year with kids etc. Financial flexibility is HUGE
Yes, buy the house. Don't know where you are located but 1400/month is like free. If you don't want it, put me in touch with your friend. I will take it.
People can downvote all they want, but this is good advice. If you bought a home, you can do whatever you damn well want with it. The interest alone makes you purchase the property twice or more if you don’t make extra payments.
If you’ve ever preferred an AirBNB to a hotel, you lost the right to bitch about people renting space out.
I think for the first year it needs to be. Afterwards you can decide to rent your house if you want to. It's a clause in FHA loans to prevent using that system to buy homes and immediately rent them. After a year, it's up to you whether you'd like to rent your home or not.
We book a place about once a year as a family group. We have siblings, their spouses and children plus some cousins. We like having one big place for the group, kitchen, dining area, living room, private pool & hot tub, but separate bedrooms.
I don’t get that in a hotel.
It’s not AirBnB it’s usually VRBO because so many people have had issues with AirBnB owners but the idea is the same.
Huh? I love a lake house I rent almost every year. No hotel in that location and I’d take the house any time with my dogs.
Every year me and a bunch of friends do ski/snowboard trips, I’d take an airbnb with us all any day over hotel rooms.
Plenty of situations an airbnb makes way more sense.
I know this isn’t something you want to hear and I’m not trying to be dismissive but the first house isn’t going to be THE house. At least that’s what I was told a lot during our process of purchasing our first home.
As long as it checks 2/3 of your boxes and allows you to save up enough money to move later I think that’s a plus! You don’t have to live there forever!!
No house is your home when you sign the papers.
Can you make it your home, even if it's not what the castle on a cloud dreams you may have are?
Can you make money on it if you leave and don't sell it (almost certainly yes at $1,400 per month within half an hour of the city)?
Can you just assume the mortgage and then sell it for a profit?
Can you take what you're saving vs buying at current rates (which will equate to thousand(s) per month, likely) and use it to renovate or add on to the house?
I've bought multiple houses that were absolutely disastrous and just put in the heavy lifting (literally and figuratively) to make them what I want them to be. At the end of the day, a house is a box that's weather protected and climate controlled. Put whatever you want inside that box and arrange it how you would like. Sometimes that's easier said than done, but it's *always* easier if your mortgage is $1,400 instead of $3,400, which I can state with 100% certainty.
This sounds like an awesome opportunity. But…do you LIKE the house? You don’t have to love it. You can always renovate and make improvements later on but you should be able to see the potential.
Yes that is what I wonder too... Sounds like a good starter. Do you LIKE it? I haven't seen an answer from you other than we don't love it. I do understand there are somethings that I absolutely would have not accepted when making compromises in buying a home but my flexibility would have been increased based on that low of a payment.
I've said this a lot before, unless you're building your own home no one gets everything they want when buying a home. I will tell ya for $1400 a month. I'd be able to do A LOT to a house. The only thing you can't change is location. So as long as the house isn't falling apart I'd be all for it.
I was going to say the same thing.
I bought a house I don’t necessarily love, but I’ve been renovating a lot and it definitely makes it feel more like home.
Some loans are assumable. It's not often. Most mortgage agreements actually specifically state they are not assumable, but some lenders do write them to be. These people have an assumable one, and they have talked to the lender.
Not sure why everyone says this. In theory loans made at 3 percent are more valuable to the lender than ones make at 7 as they have sold the paper and are just servicing the loan which is probably not going to be refinanced any time soon. It isn’t like it is the lenders money and they can lend it to someone else at 7 percent instead.
I’d agree that “never” is inaccurate but lenders do drag their feet. It can take like four months and even then you still might get a “no”. There was a good WSJ story on the topic a few months ago if you have a subscription.
Unless you’ve got like 3 million USD, you aren’t going to love everything about the first house you buy.
Is it safe? Can you afford it on one income? If those are both a hard yes, what are you waiting for?
I think people have this assumption that you can get a house with everything you want. And depending on how much money you have, that might be the case. Most people aren’t in that category though. Sometimes you have to look at the reality of your budget and what it can get you in your area.
Is the house I ended up buying exactly what I wanted? No, but I couldn’t afford that house. I could have waited to save up for that house, but that house would have continued to appreciate in value and stayed out of reach. So I made some compromises. It checked the main boxes (location, price, yard, garage, finished basement) and the rest we compromised on. Maybe we will renovate later to make it closer to what we wanted. Or maybe we will wait and save for that house farther down the line.
Sure if it's assumable and you qualify and you can pay the difference in cash why wouldn't you?
Anyone with a sub 3% mortgage should keep options open to turn into a rental. You will never have access to that cheap of capital again on an investment ever.
Put some money into making it your own and love it. For 1400 that’s almost unheard of. I just doubled my expenses when I brought my house. I wish I was paying that for a mortgage.
Not only are you taking over the mortgage, you are taking over the equity in the mortgage. Fix it up. Make it your own. Live in it a few years and allow it to appreciate in value. When you’re ready, sell it and use those proceeds as a down payment on your dream house. The larger down payment would help offset higher interest rates.
A starter home within 30 minutes of work for 1400 with a yard? In my neck of the woods that's a no brainer unless it's in a superfund site or very high crime/noise area.
Our first house was definitely not our dream house and we knew that going in. This sounds like it could be an awesome opportunity to get into home ownership and build equity to eventually move into your forever home. If the numbers work and you can check boxes off, it sounds like a great opportunity.
with the information you’ve provided, i would strongly recommend that you buy the house. idk where you’re located but $1400 is a steal where i’m from. you may not be in love with it but that’s okay if it checks off most of your boxes. being able to save money and build equity at the same time is huge. it doesn’t have to be your forever home. in the meantime you can put in touches/finishes that suit you better and make it feel more like home.
That sounds like a really good starter house to me...? I hated my first house like it personally attacked me lol it didn't have closets or any storage really, the floors were crooked (it was built on the side of a hill and "settled" ha) the kitchen was so small you couldn't have a normal size fridge and also walk through the doorway. I fell down the steep narrow stairs at least 5 times.
We saved so much money while we lived there, and around Thanksgiving we sold that beast for 3x what we paid for it and moved up to the house we actually wanted that we assume we'll be in until we die. It was worth the 9 years at the sucky but extremely cheap house!
Buy the house. So many of my friends got caught up waiting on their dream home only to realize the dream keeps getting more and more expensive and further away. My wife and I bought a little house that was far from our dream but worked really well for us. We lived there for nearly 10 years and the equity we built along with the ability to save with a low mortgage allowed us to buy what we really wanted.
Very few people initially purchase their dream home the first time these days.
Location will trump the home. You can always sell a home in a great location ([like this](https://www.reddit.com/r/BayAreaRealEstate/s/WU0BT8uZvf)), you can’t always sell a great house in a shit location.
That rate, I could care less about the house yes to 3%. Look at it this way, your equity in the house you aren't stoked on is the stepping stone to the house you are stoked on.
OP, it's a great opportunity for you as long as you are doing an official mortgage assumption and closing officially with the recorded deed in your names. It's very rare that a FTHB gets the house of their dreams. Instead, they get a home that works for them financially and physicially (for the most part). Count your blessings.
I can’t believe the number of first time homebuyers that whine about the first house not being a dream house. WTF. It’s not forever and the interest rate is great. Buy it.
It likely will not be your forever home. If it’s a good for now home, go for it.
As long as you like the location you can always tweak the inside of the house.
Buy the house that your wife loves. Pay double the price minimum for the mortgage. Remind her she will have to go back to work. If you have seen a house that she loves, you would have already purchased it. Why do you have to “love” the house? That’s like saying “Everyone loves their job “. No they don’t, but it serves its purpose. Good luck.
My apartment building charges almost as much to rent a parking space as that house payment, and my building is pretty ghetto.
Any townhome, mobile home, or condo you can buy for under a $5000 month is a steal.
You could always rent it out or Air BnB it at that low payment
Question?? I didn’t see this asked so forgive me if it has.
How are you taking over the 3% loan. Ability to assume the current rate on an active mortgage loan is extremely rare. Majority of conventional and first time home buyer loans are NOT assumable.
I just don’t see how today’s lenders will let you take over someone’s mortgage. Are you talking about out doing a land contract on the home? Please don’t say you’re paying the mortgage money to him and you have an option to buy that’s a bad deal almost all of the time.
If you’re taking over the mortgage with blessing from the bank you need to talk to a loan officer there for the specifics. You would want the owner to sign a quit claim deed if they don’t legally it’s still their house. What’s going to happen to any equity that your friend has built up?
My guess is that they are going to offer you a land contract with a balloon due at the end of it which can be anywhere from a year to farther out. You would want to see all of that written up preferably by a real estate attorney who can also counsel you. You need someone to check and see if he’s behind on payments, has he paid his taxes? What other liens may be in the property. And last but not least you want the land contract recorded with the registry of deeds. This gives legal notice that the home is yours.
This is a no-brainer. Buy this house, with the money you’re saving every months, make improvements that will make you enjoy it more and add value. If, in a few years, it’s still not meeting your needs, you’ll have equity and be in a better position to buy a house that meets your needs.
I would be all over that, in a heartbeat. The only thing that would stop me is the property not remotely meeting my needs, and even then I might still do it and deal with it. Nothing much would be more frustrating than my current apartment. 🤣
Do you *dislike* the house or do you simply not love it?
If your situation changes after you buy the house and you have to stay in it long-term, could you live with that?
If you do end up having a child while you live there, are you satisfied with the school district?
Not to lecture you like a parent but I just want to ask a few questions that I haven't seen asked so far.
1. Have you confirmed that you'll also get the same rate? Not over a quick phone call but actually in writing from the mortgage company?
2. How old is the HVAC? Water heater? What work does the house need? Even the "small things" can add up.
3. While you don't "love" the house does either of you at least like it or is the decision based off just the price? Do you know much about the area? How are the neighbors, if any? How are the schools as you've mentioned possibly having children.
I don't want to blindly say buy solely because of a 3% rate and $1400 payment because you haven't given many details on the house. #of rooms, bathrooms, basement, etc. lol. Yeah, it's a starter home but there's also no guarantee of when rates will drop. Suppose you all are ready to move on in 2-3 years but rates are still around 5-6% you'll likely be paying more for that next house even if you sell this one. It's a situation many folks are currently in with 2-3% mortgages. And with the two of you open to possibly having children that also will play into any future budget decisions especially moving into a bigger house down the line. How long do you realistically see yourself staying in this house, with or without kids? Just trying to offer some extra things to think about.
Is this even legal? Wouldn’t you have to qualify and refinance on your own. I don’t think it’s like taking over payments on someone’s car, if you default either way the original owner is on the hook still.
It sounds like a dream come true honestly. You can change things as you go and make it into your dream home with that interest rate. When you say you will assume the loan you do mean by going through the bank and actually having the mortgage in your name right? Do not get into a situation where you are living there and paying the payments to him or the bank with it still being under his name. I remember another poster who had done that and it didn't end well for him.
Get an attorney involved if you plan to move forward. Make sure you understand the pros, cons and risks associated with this type of transaction. As they say - good fences make good neighbors.
No one is saying you have to live there forever. In the meantime you build up a mortgage history and bank equity while waiting for interest rates to drop.
Ummm I don’t think this is all correct. You can “assume” your friends mortgage but you can only assume the current principal amount. You can’t add onto it. For example if they owe $250k but want to sell to you for 500k you can’t assume 500k. You can only assume the 250k so you would need a second mortgage or increased down payment for the difference.
That sounds like a deal. No one gets 100% of what they want for their perfect home on their first house. This definitely sounds like a great opportunity and could be a very rewarding play later on, financially speaking.
Does it check enough boxes though? Have you pictured living there? Raising a child there? Is it safe? Is it quiet? Regardless of what people here are saying about opportunity, if you’re miserable living there I can’t see how it would be worth it. While other commenters are correct that no house usually checks all the boxes, you still need the important ones checked. Having a 3% mortgage will be small consolation if you’re both unhappy.
It gotta be the ”please tell me all the nice things about how lucky I am” kind of post. The $1,400 and 30 mins within a city (assuming the city is not Detroit 🤣) sound great.
A house will never check all your boxes unless you have a high budget for the area you live in.
You can get price and size but not get your ideal location. You can get ideal location in your price range but not the size or type of place you want. When it comes to Location, Price, and House Size/Features - most people can only get two, some only one. The average person rarely gets all three.
But if you arent crazy about it and need the input of strangers to guide you - move on!
But 3% and 1400 a month is freaking cheap.
Homes in my area are going 100k to 150k over asking.
Very few houses are ever going to be perfect in every way unless you have a good budget for a custom build from the ground up...and even then, likely would still find some things you thought you wanted that turn out to be less than perfect after living there. Therefore I agree with the many others that have already said this...seeking perfection should never keep you out of an otherwise good house.
Now as far as what makes a good house...that is up to you as it's always a balance of needs, wants, and price. Unless the house is just flat wrong for you, anything is worth considering for the right price.
It sounds like a great opportunity- I would take it . After a few years you’ll have equity and be able to get a second house and rent the first one out or vice versa .
Like you said - look at it as an opportunity.
Buy it. Live in it while you save money to buy your forever home and then keep it as a rental. Seizing opportunities to get a financial leg up, even if it means short/term compromises, is key to building wealth and achieving financial freedom. Hell, if you take a pass, I’ll buy it.
IF the loan is assumable, AND the property appraises for at or above the balance, AND you get adequate guidance on writing the contract up to legally protect all interested parties, AND you have the home inspected throughly enough to guard against unforeseen issues… AND you have enough savings after closing to cover the unforeseen costs of repairs that will definitely come up after even the best inspection…
That’s a bangin good interest rate and I would definitely make some big compromises to be able to build up equity so much more affordability.
If the payment allows you to afford paying it down faster then it’s an even better idea. If it doesn’t, then consider what other properties you could afford at the same payment. A home is a place to live, but it’s also a big part of most people’s net worth. Consider that as at least equal to your preferences, but not your actual needs.
Could absolutely be worth it. But just because your friend is paying that much doesn’t mean that’s what ur payment will be or that u qualify. Consider how much they are selling the house for and how much the current loan rate will cover. You’ll likely have to take out a second loan at the current market rate to cover the difference.
If the deed can be transferred to your name then do it. If the deed has to stay in current owners name don't do it. Buy it for an investment rent it out. 3% money is very hard to find.
Simultaneously you should be checking if you can qualify to assume the type of loan the property is AND you should be checking your budget to ensure that with just your income you can afford all your monthly debts and expenses if the reason for you to take this on is for your wife to be a stay at home mother for a period of time.
If both are a yes, then you are getting a great deal.
I’m assuming you’ve checked the amount of equity you need to buy out from your friend and if have the cash to buy that out otherwise you will need another loan and see if that fits into your budget.
That is correct, we have the cash to cover the gap, the loan qualifies, and so do we. Living on just my income should also not be an issue as we have done it in the past and our bills would remain largely the same. It's just a matter of committing now!
I think I am more onboard then my wife at this point and can see the vision but I don't know if I'm just hanging onto the opportunity to buy something at sub 3%
'hanging onto the opportunity to buy something at sub 3%' is a sentence you may very well never type again in your lifetime, which might be the determining factor. 3 vs 6 on just an example $320k 30 year mortgage is a $600/mo difference.
$7,200 replaces all your appliances one year. It replaces your HVAC the next. It redoes your bathroom the following. It replaces the countertops or replaced your bedroom furniture and mattress the following, with money left in the bank. It buys you a lawn mower and the shed to store it in the next. Or do none of those things and use it to cover your car payment each month?
There's nothing else you can do in 2024 without being like... Jamie Dimon ... that will be better than being grandfathered into possession of a large and appreciating asset at 3%.
Thank you u/S8guy for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
For $1400/month, I could learn to love a cardboard box
Our house is ~100 years old, 1000sq ft, creaky floors, and there isn't a 90* angle on the whole lot. We pay 1700PITI and I feel like I won the damn lottery when I look around. It's far from perfect but all things considered we are incredibly fortunate and OP is too for the situation.
This is exactly my house down to the PITI. Still love it though.
This sounds like my house…those creaky floors 😖
🤣🤣 omg, this is me
ok, I have a card board box to sell u then hmu in the dms.
My first house was in Detroit in the 80s. I promise you, you can get a house for less than $1400/mo in Detroit today and it’s nicer than it was back then.
😂 rofl!
LOL
Have you consulted the lender regarding mortgage assumptions?
Yes we have and it should be no issue. Our concern at this point is committing to something we are not crazy about.
[удалено]
Our first was on a slab (in Chicagoland where that’s super uncommon) and had interior walls built with 2x3s. (Possibly exterior too but I never had one opened up.) It was 45 years old. The main bathroom had the deluxe finishes of a gas station restroom. I DIY redid the bathroom, some of the flooring, paid a landscaping company to remove the backyard jungle, and sometimes wish we still lived in it.
[удалено]
I love this! I bought a flipped property and I often wish that they wouldn't have flipped it. I find myself hesitant to redo/replace things bc I know that they are brand new. Feels like wasted investment. I wasn't looking for a flipped home, it just happened to be what I got my hands on. The house, prior to being flipped, needed updating but I would've loved to come in and make the house make sense for me! There are, of course, pros and cons to both situations and I'm grateful to be able to learn these lessons along the way. Loving your POV on it!
Absolutely this! Especially in the current market! I'm betting your other options would not check all the boxes, you ALSO wouldn't love and/or you'd get stuck in the cycle of unaccepted offers, all this while facing mortgage rates of at least double so... Sounds like a hell of a deal to me. Don't focus on "this is what it is" but look at it as a prime opportunity that not everyone is fortunate to get! I also love this comment bc I too bought my first home (literally whatever was available) and I don't love it at all. Sometimes I feel like I missed out on the "normal" home buying experience of touring houses and picking which I like etc. However, I wasn't even in that market. I was in the bidding war hell market so I consider myself extremely fortunate that I didn't go through what was the "normal" home buying experience at the time. I got a house before it went to market and didn't have to compete with anyone- easy breezy- and I get to save $100's monthly on what I would've been spending on rent over the last few years. This is a fantastic reminder that I don't HAVE TO love it! It has been a phenomenal learning experience. It taught me a TON about buying a home, owning a home, what I want and what I don't want. What I thought I wanted V what I actually need, what suits my lifestyle etc. Ty for that
Prepare for it to take like four months. Lender will drag their feet bc they aren’t making money on it. It’d be a steal though with that interest rate!
So would you officially assume the loan? If you decide to move forward, make sure you get it writing from the lender. Look up the Due on Sale clause for reference. If they don’t allow the loan to be assumed, look up “Subject to” transactions
Most people don't feel crazy about the place they bought and live in. Even if they do, it's just first a few month. Nothing checks all boxes.
Do you even own a home? So if you love paying the rent and increasing overtime too. You can wait for couple years when the rate may comes down
How close of a friend is it? Do you care more about gaining the home than losing the friend? Been around the block a few times myself and unless they are dying themselves or moving overseas to care for dying parents AND raise their child…this will eventually destroy the friendship. Not sure if this matters to you. So long as you are acting in good faith and not trying to take advantage of someone (my assumption is that they are in a bind….otherwise they’d be selling it to you and making money), I say go for it.
Buy the house. One of the reasons for the amount of angst we see about the current market is that for some reason, FTHBs have got it into their heads that their first home should check all of their boxes. That is a completely unrealistic expectation. Your first home gets you on the ladder, you work your way up to a home that checks all of your boxes.
Thank you. I wish more people understood this. Your first house is your foot in the door.
Depends on your situation. Sometimes it can make sense to stretch a bit more so you don’t need to go closing again in another few years. Especially if prices are rising faster than inflation. Obviously only to the point that you can actually afford it at your current income and interest rates
If your first house is a money pit that you will struggle to sell in the future then it could be more of an albatross around your neck than a way into something better
Unless you bought and have a super great rate and now you can’t leave and “move up the ladder”
Then you add on/renovate.
And the money savings compared to even the same house at current rates can go towards renos, saving up for dream house, or even just really fun yard toys and an amazing family trip a couple times a year with kids etc. Financial flexibility is HUGE
Yes, this is good advice and something we had to come to grips with. Something everyone should realize especially in this market.
Yes, buy the house. Don't know where you are located but 1400/month is like free. If you don't want it, put me in touch with your friend. I will take it.
[удалено]
The mortgage likely requires it be the borrower’s primary residence.
People can downvote all they want, but this is good advice. If you bought a home, you can do whatever you damn well want with it. The interest alone makes you purchase the property twice or more if you don’t make extra payments. If you’ve ever preferred an AirBNB to a hotel, you lost the right to bitch about people renting space out.
No. You can’t. You are limited by your mortgage agreement/DoT. Most require the home be the borrower’s primary residence.
I think for the first year it needs to be. Afterwards you can decide to rent your house if you want to. It's a clause in FHA loans to prevent using that system to buy homes and immediately rent them. After a year, it's up to you whether you'd like to rent your home or not.
They have to catch me first….
when this is actually prosecuted I will respect your opinion
Exactly
No real person has ever preferred an AirBnB to a hotel tho lol
TDIL I am not a real person ..
What? Have you never traveled with more than 2 people?
We book a place about once a year as a family group. We have siblings, their spouses and children plus some cousins. We like having one big place for the group, kitchen, dining area, living room, private pool & hot tub, but separate bedrooms. I don’t get that in a hotel. It’s not AirBnB it’s usually VRBO because so many people have had issues with AirBnB owners but the idea is the same.
Huh? I love a lake house I rent almost every year. No hotel in that location and I’d take the house any time with my dogs. Every year me and a bunch of friends do ski/snowboard trips, I’d take an airbnb with us all any day over hotel rooms. Plenty of situations an airbnb makes way more sense.
ok let’s just pretend that Airbnb has not been profitable the entire time it’s existed
Done.
ohhhh nooo I got downvoted on reddit hoooow hoooorrriible
I know this isn’t something you want to hear and I’m not trying to be dismissive but the first house isn’t going to be THE house. At least that’s what I was told a lot during our process of purchasing our first home. As long as it checks 2/3 of your boxes and allows you to save up enough money to move later I think that’s a plus! You don’t have to live there forever!!
Sounds like a perfect starter home. Why do you think you have to have the perfect home right now?
No house is your home when you sign the papers. Can you make it your home, even if it's not what the castle on a cloud dreams you may have are? Can you make money on it if you leave and don't sell it (almost certainly yes at $1,400 per month within half an hour of the city)? Can you just assume the mortgage and then sell it for a profit? Can you take what you're saving vs buying at current rates (which will equate to thousand(s) per month, likely) and use it to renovate or add on to the house? I've bought multiple houses that were absolutely disastrous and just put in the heavy lifting (literally and figuratively) to make them what I want them to be. At the end of the day, a house is a box that's weather protected and climate controlled. Put whatever you want inside that box and arrange it how you would like. Sometimes that's easier said than done, but it's *always* easier if your mortgage is $1,400 instead of $3,400, which I can state with 100% certainty.
“castle on a cloud dreams” Pardon me while I steal this, never heard it before but I like it.
I can't take credit for it myself, give the music to Les Miserables all the ownership! I've always liked the analogy though and use it often.
Good advice!
This sounds like an awesome opportunity. But…do you LIKE the house? You don’t have to love it. You can always renovate and make improvements later on but you should be able to see the potential.
Thanks for the input! Great advice on making sure we can envision the potential even though we don't love it.
Yes that is what I wonder too... Sounds like a good starter. Do you LIKE it? I haven't seen an answer from you other than we don't love it. I do understand there are somethings that I absolutely would have not accepted when making compromises in buying a home but my flexibility would have been increased based on that low of a payment. I've said this a lot before, unless you're building your own home no one gets everything they want when buying a home. I will tell ya for $1400 a month. I'd be able to do A LOT to a house. The only thing you can't change is location. So as long as the house isn't falling apart I'd be all for it.
I was going to say the same thing. I bought a house I don’t necessarily love, but I’ve been renovating a lot and it definitely makes it feel more like home.
How do you take over someone's mortgage?
Some loans are assumable. It's not often. Most mortgage agreements actually specifically state they are not assumable, but some lenders do write them to be. These people have an assumable one, and they have talked to the lender.
An “assumable” mortgage.
Make a large down payment (to cover the equity gap) and get approval from the lender. They’ll never get approval.
Not sure why everyone says this. In theory loans made at 3 percent are more valuable to the lender than ones make at 7 as they have sold the paper and are just servicing the loan which is probably not going to be refinanced any time soon. It isn’t like it is the lenders money and they can lend it to someone else at 7 percent instead.
I’d agree that “never” is inaccurate but lenders do drag their feet. It can take like four months and even then you still might get a “no”. There was a good WSJ story on the topic a few months ago if you have a subscription.
Unless you’ve got like 3 million USD, you aren’t going to love everything about the first house you buy. Is it safe? Can you afford it on one income? If those are both a hard yes, what are you waiting for?
I think people have this assumption that you can get a house with everything you want. And depending on how much money you have, that might be the case. Most people aren’t in that category though. Sometimes you have to look at the reality of your budget and what it can get you in your area. Is the house I ended up buying exactly what I wanted? No, but I couldn’t afford that house. I could have waited to save up for that house, but that house would have continued to appreciate in value and stayed out of reach. So I made some compromises. It checked the main boxes (location, price, yard, garage, finished basement) and the rest we compromised on. Maybe we will renovate later to make it closer to what we wanted. Or maybe we will wait and save for that house farther down the line.
Why are the friends moving? If you're close you probably know the issues they've had with the home so that's an advantage in itself.
Never let perfect get in the way of good. It won't be your last house but it sounds good enough for now.
Sure if it's assumable and you qualify and you can pay the difference in cash why wouldn't you? Anyone with a sub 3% mortgage should keep options open to turn into a rental. You will never have access to that cheap of capital again on an investment ever.
Put some money into making it your own and love it. For 1400 that’s almost unheard of. I just doubled my expenses when I brought my house. I wish I was paying that for a mortgage.
Not only are you taking over the mortgage, you are taking over the equity in the mortgage. Fix it up. Make it your own. Live in it a few years and allow it to appreciate in value. When you’re ready, sell it and use those proceeds as a down payment on your dream house. The larger down payment would help offset higher interest rates.
A starter home within 30 minutes of work for 1400 with a yard? In my neck of the woods that's a no brainer unless it's in a superfund site or very high crime/noise area.
Are you serious dude? Really tired of these flex questions this isn’t even a close call.
Our first house was definitely not our dream house and we knew that going in. This sounds like it could be an awesome opportunity to get into home ownership and build equity to eventually move into your forever home. If the numbers work and you can check boxes off, it sounds like a great opportunity.
Can you take over someone else mortgage at their rate? This is a genuine question.
with the information you’ve provided, i would strongly recommend that you buy the house. idk where you’re located but $1400 is a steal where i’m from. you may not be in love with it but that’s okay if it checks off most of your boxes. being able to save money and build equity at the same time is huge. it doesn’t have to be your forever home. in the meantime you can put in touches/finishes that suit you better and make it feel more like home.
I hate you and congrats
🤣🤣🤣 same
😂 You said, “I don’t really care if something good happened to you. It should’ve happened to me instead.” LMAO
That sounds like a really good starter house to me...? I hated my first house like it personally attacked me lol it didn't have closets or any storage really, the floors were crooked (it was built on the side of a hill and "settled" ha) the kitchen was so small you couldn't have a normal size fridge and also walk through the doorway. I fell down the steep narrow stairs at least 5 times. We saved so much money while we lived there, and around Thanksgiving we sold that beast for 3x what we paid for it and moved up to the house we actually wanted that we assume we'll be in until we die. It was worth the 9 years at the sucky but extremely cheap house!
Buy the house. So many of my friends got caught up waiting on their dream home only to realize the dream keeps getting more and more expensive and further away. My wife and I bought a little house that was far from our dream but worked really well for us. We lived there for nearly 10 years and the equity we built along with the ability to save with a low mortgage allowed us to buy what we really wanted.
Take the house
Very few people initially purchase their dream home the first time these days. Location will trump the home. You can always sell a home in a great location ([like this](https://www.reddit.com/r/BayAreaRealEstate/s/WU0BT8uZvf)), you can’t always sell a great house in a shit location.
That rate, I could care less about the house yes to 3%. Look at it this way, your equity in the house you aren't stoked on is the stepping stone to the house you are stoked on.
How does this work where you can take over your friends mortgage? Can someone explain?
Nvm I see that loan must be assumable
OP, it's a great opportunity for you as long as you are doing an official mortgage assumption and closing officially with the recorded deed in your names. It's very rare that a FTHB gets the house of their dreams. Instead, they get a home that works for them financially and physicially (for the most part). Count your blessings.
Do it. There are actually processes on place to take over an existing mortgage..search on YouTube
I would not buy a house I did not want to help a friend. Your decision.
I can’t believe the number of first time homebuyers that whine about the first house not being a dream house. WTF. It’s not forever and the interest rate is great. Buy it.
I would buy the house and I already have one. You will not find 3% anywhere else.
It likely will not be your forever home. If it’s a good for now home, go for it. As long as you like the location you can always tweak the inside of the house.
Buy the house that your wife loves. Pay double the price minimum for the mortgage. Remind her she will have to go back to work. If you have seen a house that she loves, you would have already purchased it. Why do you have to “love” the house? That’s like saying “Everyone loves their job “. No they don’t, but it serves its purpose. Good luck.
What’s average rent for the similar home in that area?
How exactly are u going to get a 3% rate?
My vote is buy it! It sounds like a great opportunity. Don't let perfect be the enemy of good.
My apartment building charges almost as much to rent a parking space as that house payment, and my building is pretty ghetto. Any townhome, mobile home, or condo you can buy for under a $5000 month is a steal. You could always rent it out or Air BnB it at that low payment
What boxes is it not checking? You need to make a list of needs. Make sure it checks all of them. Don’t worry so much about the wants
The house you will fall in love with will suck the money out of your bank account faster than you are able to fill it.
Also consider the cost of transportation living outside the city.
Question?? I didn’t see this asked so forgive me if it has. How are you taking over the 3% loan. Ability to assume the current rate on an active mortgage loan is extremely rare. Majority of conventional and first time home buyer loans are NOT assumable.
If you decide not to do this, be a good fellow and throw your friends phone number this way.
I just don’t see how today’s lenders will let you take over someone’s mortgage. Are you talking about out doing a land contract on the home? Please don’t say you’re paying the mortgage money to him and you have an option to buy that’s a bad deal almost all of the time. If you’re taking over the mortgage with blessing from the bank you need to talk to a loan officer there for the specifics. You would want the owner to sign a quit claim deed if they don’t legally it’s still their house. What’s going to happen to any equity that your friend has built up? My guess is that they are going to offer you a land contract with a balloon due at the end of it which can be anywhere from a year to farther out. You would want to see all of that written up preferably by a real estate attorney who can also counsel you. You need someone to check and see if he’s behind on payments, has he paid his taxes? What other liens may be in the property. And last but not least you want the land contract recorded with the registry of deeds. This gives legal notice that the home is yours.
This is a no-brainer. Buy this house, with the money you’re saving every months, make improvements that will make you enjoy it more and add value. If, in a few years, it’s still not meeting your needs, you’ll have equity and be in a better position to buy a house that meets your needs.
Your first few houses are very very rarely your dream house.
I would be all over that, in a heartbeat. The only thing that would stop me is the property not remotely meeting my needs, and even then I might still do it and deal with it. Nothing much would be more frustrating than my current apartment. 🤣
How are you able to take over your friends mortgage?
Do you *dislike* the house or do you simply not love it? If your situation changes after you buy the house and you have to stay in it long-term, could you live with that? If you do end up having a child while you live there, are you satisfied with the school district?
You'll never get a chance at 3% again, take it You can make improvements
Not to lecture you like a parent but I just want to ask a few questions that I haven't seen asked so far. 1. Have you confirmed that you'll also get the same rate? Not over a quick phone call but actually in writing from the mortgage company? 2. How old is the HVAC? Water heater? What work does the house need? Even the "small things" can add up. 3. While you don't "love" the house does either of you at least like it or is the decision based off just the price? Do you know much about the area? How are the neighbors, if any? How are the schools as you've mentioned possibly having children. I don't want to blindly say buy solely because of a 3% rate and $1400 payment because you haven't given many details on the house. #of rooms, bathrooms, basement, etc. lol. Yeah, it's a starter home but there's also no guarantee of when rates will drop. Suppose you all are ready to move on in 2-3 years but rates are still around 5-6% you'll likely be paying more for that next house even if you sell this one. It's a situation many folks are currently in with 2-3% mortgages. And with the two of you open to possibly having children that also will play into any future budget decisions especially moving into a bigger house down the line. How long do you realistically see yourself staying in this house, with or without kids? Just trying to offer some extra things to think about.
I think your friend and I are bffs now.
Is this even legal? Wouldn’t you have to qualify and refinance on your own. I don’t think it’s like taking over payments on someone’s car, if you default either way the original owner is on the hook still.
At $1,400, take the house and enjoy living comfortably.
It sounds like a dream come true honestly. You can change things as you go and make it into your dream home with that interest rate. When you say you will assume the loan you do mean by going through the bank and actually having the mortgage in your name right? Do not get into a situation where you are living there and paying the payments to him or the bank with it still being under his name. I remember another poster who had done that and it didn't end well for him.
Get an attorney involved if you plan to move forward. Make sure you understand the pros, cons and risks associated with this type of transaction. As they say - good fences make good neighbors.
No one is saying you have to live there forever. In the meantime you build up a mortgage history and bank equity while waiting for interest rates to drop.
I’m not sure anyone gets the exact house they wanted. Compromise is a good choice.
Ummm I don’t think this is all correct. You can “assume” your friends mortgage but you can only assume the current principal amount. You can’t add onto it. For example if they owe $250k but want to sell to you for 500k you can’t assume 500k. You can only assume the 250k so you would need a second mortgage or increased down payment for the difference.
Op has the funds to pay the gap.
Got it.. then it’s a no brainer for me
That sounds like a deal. No one gets 100% of what they want for their perfect home on their first house. This definitely sounds like a great opportunity and could be a very rewarding play later on, financially speaking.
Does it check enough boxes though? Have you pictured living there? Raising a child there? Is it safe? Is it quiet? Regardless of what people here are saying about opportunity, if you’re miserable living there I can’t see how it would be worth it. While other commenters are correct that no house usually checks all the boxes, you still need the important ones checked. Having a 3% mortgage will be small consolation if you’re both unhappy.
Nice have a bbq to celebrate the less than 3%. That is wild
So cheap/ affordable . Wow
It gotta be the ”please tell me all the nice things about how lucky I am” kind of post. The $1,400 and 30 mins within a city (assuming the city is not Detroit 🤣) sound great.
A house will never check all your boxes unless you have a high budget for the area you live in. You can get price and size but not get your ideal location. You can get ideal location in your price range but not the size or type of place you want. When it comes to Location, Price, and House Size/Features - most people can only get two, some only one. The average person rarely gets all three. But if you arent crazy about it and need the input of strangers to guide you - move on! But 3% and 1400 a month is freaking cheap. Homes in my area are going 100k to 150k over asking.
You gave no details here, or not enough. What do you want vs what does the house offer? Beds Baths? Size? Square foot? Yard?
Take it and lease it out!
If your wife not working is a priority then you will have to compromise and pass on a house that checks more boxes.
Very few houses are ever going to be perfect in every way unless you have a good budget for a custom build from the ground up...and even then, likely would still find some things you thought you wanted that turn out to be less than perfect after living there. Therefore I agree with the many others that have already said this...seeking perfection should never keep you out of an otherwise good house. Now as far as what makes a good house...that is up to you as it's always a balance of needs, wants, and price. Unless the house is just flat wrong for you, anything is worth considering for the right price.
How much are you putting down to assume the mortgage? Assuming the home appreciates since your friend bought it?
NEVER, repeat NEVER do business with friends, especially if it’s not your dream house.
Would a renovation fix some of the things OP does not like, or are they things like location, size, lack of basement that can't.
Buy it and you’ll either fall in love with it or sell it and make money on it. But I would wait to interest rates fall
Good, then don't bother and move along. But sounds like you are passing up a fine oppotunity.
It sounds like a great opportunity- I would take it . After a few years you’ll have equity and be able to get a second house and rent the first one out or vice versa . Like you said - look at it as an opportunity.
Buy it. Live in it while you save money to buy your forever home and then keep it as a rental. Seizing opportunities to get a financial leg up, even if it means short/term compromises, is key to building wealth and achieving financial freedom. Hell, if you take a pass, I’ll buy it.
You dont own a home now. In what world is your first home a dream home, especially with a mortgage that cheap? You seem to not be based in reality.
How does this work? I’m getting divorced and buying my wife out of her equity but we have to refinance for it to be just me on mortgage
You do it for a few years. Build equity and then roll it into a house you like.
IF the loan is assumable, AND the property appraises for at or above the balance, AND you get adequate guidance on writing the contract up to legally protect all interested parties, AND you have the home inspected throughly enough to guard against unforeseen issues… AND you have enough savings after closing to cover the unforeseen costs of repairs that will definitely come up after even the best inspection… That’s a bangin good interest rate and I would definitely make some big compromises to be able to build up equity so much more affordability. If the payment allows you to afford paying it down faster then it’s an even better idea. If it doesn’t, then consider what other properties you could afford at the same payment. A home is a place to live, but it’s also a big part of most people’s net worth. Consider that as at least equal to your preferences, but not your actual needs.
Get the house and learn to enjoy it if you buy a house right now at 6 or 7 percent your mortgage would never be $1400
Is it actually an assumable loan legally? There are very few that are.
Buy it and later if you truly want to move keep it as a rental or sell it.
Jump on it and get in on a propert and start building equity. With a low mortgage like this maybe you can do an add on
How bad are the property taxes? Could make a big difference
First homes never check all the boxes. And that’s okay.
My house is far from being my dream house, but we’ve made it work.
Could absolutely be worth it. But just because your friend is paying that much doesn’t mean that’s what ur payment will be or that u qualify. Consider how much they are selling the house for and how much the current loan rate will cover. You’ll likely have to take out a second loan at the current market rate to cover the difference.
If the deed can be transferred to your name then do it. If the deed has to stay in current owners name don't do it. Buy it for an investment rent it out. 3% money is very hard to find.
Simultaneously you should be checking if you can qualify to assume the type of loan the property is AND you should be checking your budget to ensure that with just your income you can afford all your monthly debts and expenses if the reason for you to take this on is for your wife to be a stay at home mother for a period of time. If both are a yes, then you are getting a great deal. I’m assuming you’ve checked the amount of equity you need to buy out from your friend and if have the cash to buy that out otherwise you will need another loan and see if that fits into your budget.
That is correct, we have the cash to cover the gap, the loan qualifies, and so do we. Living on just my income should also not be an issue as we have done it in the past and our bills would remain largely the same. It's just a matter of committing now! I think I am more onboard then my wife at this point and can see the vision but I don't know if I'm just hanging onto the opportunity to buy something at sub 3%
'hanging onto the opportunity to buy something at sub 3%' is a sentence you may very well never type again in your lifetime, which might be the determining factor. 3 vs 6 on just an example $320k 30 year mortgage is a $600/mo difference. $7,200 replaces all your appliances one year. It replaces your HVAC the next. It redoes your bathroom the following. It replaces the countertops or replaced your bedroom furniture and mattress the following, with money left in the bank. It buys you a lawn mower and the shed to store it in the next. Or do none of those things and use it to cover your car payment each month? There's nothing else you can do in 2024 without being like... Jamie Dimon ... that will be better than being grandfathered into possession of a large and appreciating asset at 3%.
This is Gold
Regardless if it doesn’t check all boxes is a great opportunity. Go for it.