Houses you ... sort of can afford


Backroads
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This is a trend I see among Facebook aquaintences: building homes. Now you say, Backroads, building a home is a perfectly valid option.

But... these are people I know can't really be affording it. In some cases, the parents are funding the building to a greater or lesser extent.

The latest case is two kids who make a little over minimum wage each, one is only employed part-time. The new house is going to be huge and I'm not sure how they can afford it. 

 

I know it's not my business, but I see so many young couples breaking the bank to get these huge houses.

 

Is this... wise?

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The last time I saw this happening was 2005-2008, before the housing bubble blew. Those young couples who bought more they could afford on loans with bad terms lost their homes. No, it's not wise...  on the part of anyone. The borrower, the lender, or the builder. 

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The house I would like to purchase is 1.2 Million, if I justify 90% of my earnings, sure I could afford it, but this would not be wise. I assume it really depends on how much parental support they are receiving. If the parents are paying 90%, and they are only left with 10%, then I don't see anything unwise. If the parents are supporting 5% and they are 95% of a home that is over 400K, and they make less than 30K a year -- unwise.

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One cannot judge the state of one's finances from the size of their houses.  FACT.

For example, my sister's house is 1000 sq feet bigger than mine.  It is also $100,000+ cheaper than mine.

And another example, my brother's house is 1000 sq feet smaller than mine and $100,000+ cheaper than mine.  I have a higher net worth and liquidity than he does.

So, am I wiser than my sister because I have a smaller house?  No.  Is she wiser than me because she has a cheaper house?  No.

Is my brother wiser than me because he has a smaller house?  No.  Am I wiser than him because I have lesser debt?  No.

Wisdom is in one's ability to follow the promptings of the Spirit and one's ability to provide for their family and serve their neighbors.  It has nothing to do with the square footage of one's house or the size of their pocketbooks.

 

And in addition to this:  A parent buying his children's houses or helping them purchase it does not make either the parents or the children unwise people.

Edited by anatess2
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Guest MormonGator

 

7 hours ago, Eowyn said:

The last time I saw this happening was 2005-2008, before the housing bubble blew. Those young couples who bought more they could afford on loans with bad terms lost their homes. No, it's not wise...  on the part of anyone. The borrower, the lender, or the builder. 

THIS. 

Many factors went into the recession, but people borrowing HUGE amounts of money with no ability to pay it back was probably the biggest one. 

However, you may not know their circumstances. Maybe their parents bought it outright for them. You can have a relative pass away and leave you a fortune. Who knows? 

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36 minutes ago, MormonGator said:

 

THIS. 

Many factors went into the recession, but people borrowing HUGE amounts of money with no ability to pay it back was probably the biggest one. 

However, you may not know their circumstances. Maybe their parents bought it outright for them. You can have a relative pass away and leave you a fortune. Who knows? 

With the loans, what happened was that people who previously couldn't get credit for one reason or another (usually because they were regarded as poor credit risks for one reason or another) were being given credit via the sub-prime loans. Some banks were only doing it because they were under pressure to be more "progressive" with their loan policies, while others saw the high interest rates that they could charge for the sub-prime loans and started doling them out like peppermint disks. 

So long as the money was moving, the "right" groups now had credit, and Uncle Sam was playing sugar daddy in case things went wrong, no one cared. 

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8 minutes ago, Ironhold said:

With the loans, what happened was that people who previously couldn't get credit for one reason or another (usually because they were regarded as poor credit risks for one reason or another) were being given credit via the sub-prime loans. Some banks were only doing it because they were under pressure to be more "progressive" with their loan policies, while others saw the high interest rates that they could charge for the sub-prime loans and started doling them out like peppermint disks. 

So long as the money was moving, the "right" groups now had credit, and Uncle Sam was playing sugar daddy in case things went wrong, no one cared. 

Yes. All true. And sadly, when they couldn't repay the loans-2008 happened. 

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When I bought my home in 2000, I was pre-approved for a $250,000 loan. I was making $30,000-$32,000/yr at the time. I was baffled how in the world I could afford a loan of that amount on my income. I suppose if I didn't eat, want electricity, use water, or pay taxes, then maybe I could afford the monthly payments.

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Where I am from it is common knowledge that you start small, build equity and then upgrade to the dream house that you want. When I was going to college in Utah/ provo area back in the early 2000's, the common knowledge was that you start off with your dream home, part of it was that homes in utah are cheaper but mostly it was all about buying on credit.

I think its more sort of "keeping up with the joneses" mentality.

Edited by priesthoodpower
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If it were one or two couples, I probably wouldn't pay it any mind, figuring they knew what they were doing, had help or outside money. But it seems to be such a trend! Graduated from college or still be going to college, and go buy/build a huge house. I have trouble believing the prices are that great for such big houses or that so many people have outside help.

And while I have no problem with parents helping with a first house if all parties are willing, again, are there really so many parents that can afford to buy their kids such houses?

I have a cousin who is self-admitting "house poor". I don't fault them as they can afford it and knew what they were getting into, accepting that making a big fancy house a priority would require sacrifice in other areas. But... her husband makes twice what I do and according to them barely covers the mortgage. She runs a daycare to pay all the other bills.

However, I'm probably far from perfect. We have less house than we can afford just so we can do small, fun things at the drop of a hat.

Edited by Backroads
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Some of it has to do with different priorities. 

I have a friend that goes to Disney World every 2 years. She stays on site and spends a week there. She's a bargain hunter and she gets deals, but even with deals, I think she spends between $3,000-$5,000 for each stay there. For that amount, my husband and I could fly overseas to vacation. She has no interest in that, but I have no interest in going to Disney that often.

I don't want to spend a lot on my house because I want to spend my money on other things. Obviously, some people want to spend their money on a nicer/bigger house.

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16 minutes ago, Backroads said:

And while I have no problem with parents helping with a first house if all parties are willing, again, are there really so many parents that can afford to buy their kids such houses?

 

 I don't want to say it's common, but I know of several families in my social circle whose parents bought them a house out of college or when they got married. 

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On ‎4‎/‎4‎/‎2016 at 0:53 AM, priesthoodpower said:

Where I am from it is common knowledge that you start small, build equity and then upgrade to the dream house that you want. When I was going to college in Utah/ provo area back in the early 2000's, the common knowledge was that you start off with your dream home, part of it was that homes in utah are cheaper but mostly it was all about buying on credit.

I think its more sort of "keeping up with the joneses" mentality.

My father ingrained into me that your house is your children's sanctuary - a part of the environment where they learn to be adults.  As such, he believes (and I do too) that one needs to buy THE house... not a "first" or "starter" house to indicate disposability.  My dad was a travelling salesman when I was born.  Hence, he didn't have a house as he had to move every few months.  My mother finally stamped her foot and told him to quit his job and stay put.  So he quit his job.  Without another job waiting in the wings... with 4 kids to feed and a stay-at-home wife.  We all moved in with my uncle and my dad made soap (he's a chemical engineer) that he sold door-to-door around the area to keep us afloat until he finally found a non-travelling job.  He built his first house, we all moved in, and that's our house until today where all my childhood memories and childhood friends and the best growing up years of my life were spent.

My siblings lived with my parents until they could afford to get THE house.  My brother who took 12 years to graduate from med school, stayed with his wife and 3 kids in our childhood home with my parents until he finished building his house at age 40.

All my siblings got THE house.  I bought my house when I was still single, so I bought an "investment house".  I had no plans on raising a family there.  My husband moved in with me when we got married and we started looking for THE house together.

The size of our houses has nothing to do with the size of the Joneses.  We bought the house that we need for our family.  My brother got a 7-bedroom 5,000+ sq ft house because that's what he needs.  My other brother got a 1600 sq. ft house because that's what he needs.  If we couldn't afford the house that we need on the income that we had, we stayed with the parents until we can afford it.

By the way, the rule of thumb is... if the mortgage is more than 40% of our net income, we can't afford it.  We don't do speculating... that is, buying a house at 60% of our income because 5 years from now we'll get a raise and that 60% will become 40% then... no.  The money we get later goes to things like - retirement, college for the kids, etc.  It shouldn't be spent trying to chase down a mortgage.

Edited by anatess2
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With all due respect to your father and the sacred experiences you mention, I don't really cotton to that philosophy. Our home is not our house, which in fact is exactly a changeable, even disposable commodity. I strongly disagree with the idea that if I think I "need" a 2000-square-foot house for my seven children but I can't afford it, then the thing to do is to shack up in Mom's basement until I can. That might work for some people, but in no way is that a one-size-fits-all (or most, or even a significant minority) solution.

Edited by Vort
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Guest MormonGator
40 minutes ago, Vort said:

With all due respect to your father and the sacred experiences you mention, I don't really cotton to that philosophy. Our home is not our house, which in fact is exactly a changeable, even disposable commodity. 

Absolutely agree. When we recently moved people were saying in regards to our old house  "Oh, it's your first house you bought together! Don't you feel sad leaving?" LadyGator and I said "No. We are swapping assets. Trade in one, get another. No emotion involved at all." It's a house. That's it. 

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While I respect the philosophy, anatess, it seems that living twelve years in someone else's home in order to save up for the "home for your children's childhood" negates the entire point as the kids spend a good chunk of childhood in another house altogether. It sounds great for some, but certainly not great for everyone across the board.

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14 hours ago, Backroads said:

While I respect the philosophy, anatess, it seems that living twelve years in someone else's home in order to save up for the "home for your children's childhood" negates the entire point as the kids spend a good chunk of childhood in another house altogether. It sounds great for some, but certainly not great for everyone across the board.

No, it doesn't negate the entire point because the grandparents' houses ARE home.  The grandparents house is an extension of everyone of our houses.  If it takes you 12 years to afford a house, so much more you should stay with your parents.  How long do you think it will take you to afford one while paying rent?

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6 hours ago, anatess2 said:

No, it doesn't negate the entire point because the grandparents' houses ARE home.  The grandparents house is an extension of everyone of our houses.  If it takes you 12 years to afford a house, so much more you should stay with your parents.  How long do you think it will take you to afford one while paying rent?

We don't pay rent. Rent is more expensive in my area than just buying a house. And my parents can't afford to go out and buy a giant house so they can room all their offspring and their offspring's offspring.

No, thanks. I'm going to happily live in my little house peacefully with my family instead of cramming thirty people into my folks' house.

 

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11 minutes ago, Backroads said:

No, thanks. I'm going to happily live in my little house peacefully with my family instead of cramming thirty people into my folks' house.

 

Oh I'm with you. There is nothing living in your own home. Something special about it. 

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17 hours ago, Backroads said:

We don't pay rent. Rent is more expensive in my area than just buying a house. And my parents can't afford to go out and buy a giant house so they can room all their offspring and their offspring's offspring.

No, thanks. I'm going to happily live in my little house peacefully with my family instead of cramming thirty people into my folks' house.

 

 

Well, the point is... you stay with the parents until you can afford your own house.

 

But this is not just a stand-on-its-own principle.  This is a We Are Family principle.  This goes with the parents helping out the kids with college if needed so they can get up on their own feet faster.  This goes with the kids, once independent, help out the siblings so they can get on their own feet too.  This goes with every member of the family helping out each other when one falls down instead of relying on government welfare.  This goes with the kids, once the parents are too old to be on their own get to take their parents into their own home instead of sending them off to a nursing home.  They all tie into it.  My brother, with his wife and 3 kids living with my parents until he finished building his own 5,000+ sq ft house, is just as comfortable in the little 3-bedroom house with my parents and my mom's brood of dogs than they are at the new 7-bedroom one.  But yeah, once he built his "mansion", we all now cram into his house when we get together.  We don't cram into my childhood home anymore (although we're comfortable there too).  My nephew and 2 of my cousins now live in our childhood home until they get on their own feet.  We were trying to decide what to do with the house when my dad passed.  My mom said we should just sell it and divide the money among ourselves.  Instead, we all decided to use my dad's money that he left us to fix up the house for the next generation.

By the way, my grandfather's house finally got taken down (it has served as home to several of my uncles and cousins) not too long ago.  All my cousins and their children now have their own or their parents' houses to stay in until they get their own houses, so my grandfather's house has stayed empty for years only to be used occasionally for family gatherings.  Nobody wanted to sell the property so my aunt who inherited the house, tore the old house down and turned it into apartments to help pay for cancer treatments for several family members.  We all had one last family reunion at the grandparents and had a cry-fest before the dozers flattened out the place.  It was like my grandparents died all over again.

Edited by anatess2
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It's a lovely principal, anatess, but it still sounds as if someone in the family is expected at some point to build a giant house just to get things moving to helping each other out. I guess I just don't see a point in holding out until I can have the mansion. Am I bad daughter for not wanting to save up for the huge impressive house? Can't we just help each other out on a smaller scale without having to build huge homes?

I don't mean to be all critical, but I feel like you're saying aim for the best house rather than going with something small and humble, just for the purpose of possibly holding family.

 

Edited by Backroads
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1 hour ago, Backroads said:

It's a lovely principal, anatess, but it still sounds as if someone in the family is expected at some point to build a giant house just to get things moving to helping each other out. I guess I just don't see a point in holding out until I can have the mansion. Am I bad daughter for not wanting to save up for the huge impressive house? Can't we just help each other out on a smaller scale without having to build huge homes?

I don't mean to be all critical, but I feel like you're saying aim for the best house rather than going with something small and humble, just for the purpose of possibly holding family.

 

But we don't need big impressive houses... Like I said, we're just as comfortable in my childhood 3-bedroom as in my brother's 7-bedroom.  My brother, of course, is a neurologist with his wife a pediatrician who has the ambition and the money to build a 7-bedroom to give both in-laws their own rooms.  My other brother's entire house will fit in my neurologist brother's family room.  My other brother also has 3 kids - his house is the same size as my childhood home (1600 sq ft).  My parents sometimes live in his little house for months at a time and my sister, with her own 3 kids lived with him for a year while she was figuring out where she wants to stake her family roots.

I'm saying... Aim for the house that your family needs.  We don't all need a 7-bedroom.  We can all live in a small house.  Of course, if you can afford a big house, go for it.  I just don't see the idea of getting into a "starter home" that you know won't fit your needs in the future (unless there's other reasons like me buying my house before I even found a husband so I bought an investment house).  But that's just my family and how we have been raised for generations.

Edited by anatess2
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