Home buying options in a tough market
March 12, 2022 11:32 PM Subscribe
So, my spouse and I would really like to buy a home in our mid thirties. We both work full time; we also don't want to leave the city we live in, which is LGBTQ friendly, accessible, has public transport (both non drivers) and good air quality.
However, the market just keeps climbing and climbing. We have discussed the following options and are really unsure which is the best of a bad bunch:
1. Buy a small central apartment by splitting between the mortgage we can get and a loan from my in laws from their refinancing their house.
2. Buy a further out, larger place with a 1 hour bus commute with the same help
3. My mum is selling up for a smaller place and offered to split a larger place with us on the proceeds as a duplex, adding a kitchenette up top for herself, or adding an extension granny flat. We could afford this with just mortgage price + considerable extra for refurbishments
4. Wait for the market to fall/spouse to get another pay increase (possible) and buy then on our own money while renting the small flat spouse especially can't stand
5. Rent a place we actually like and are happy with for a higher rent while waiting for the market to fall, but not be in a good place to save for a deposit.
Relevant sidebars:
- in laws are more and more worried about retirement finances with both spouse's sibling needing considerable financial help, elderly grandparents, and the stock market. I get on great with them and I'm really scared of putting them in a bad position with care, medical bills or even just enjoying retirement
- we both get on great with my mum, but obviously a lot of negotiation would be required if financial support involved splitting a place
- spouse is disabled and while the lack of accessibility in our rental doesn't cause huge problems it would be really life enhancing for them to have accommodations at home
- spouse is WFH
I feel really stuck on what I should even be working towards rn
1. Buy a small central apartment by splitting between the mortgage we can get and a loan from my in laws from their refinancing their house.
2. Buy a further out, larger place with a 1 hour bus commute with the same help
3. My mum is selling up for a smaller place and offered to split a larger place with us on the proceeds as a duplex, adding a kitchenette up top for herself, or adding an extension granny flat. We could afford this with just mortgage price + considerable extra for refurbishments
4. Wait for the market to fall/spouse to get another pay increase (possible) and buy then on our own money while renting the small flat spouse especially can't stand
5. Rent a place we actually like and are happy with for a higher rent while waiting for the market to fall, but not be in a good place to save for a deposit.
Relevant sidebars:
- in laws are more and more worried about retirement finances with both spouse's sibling needing considerable financial help, elderly grandparents, and the stock market. I get on great with them and I'm really scared of putting them in a bad position with care, medical bills or even just enjoying retirement
- we both get on great with my mum, but obviously a lot of negotiation would be required if financial support involved splitting a place
- spouse is disabled and while the lack of accessibility in our rental doesn't cause huge problems it would be really life enhancing for them to have accommodations at home
- spouse is WFH
I feel really stuck on what I should even be working towards rn
Option 3 will give you the most bang for your buck. The issue is that it will take a while to find the right property, but it sounds like you're not in a huge rush. I'd start looking for properties that meet your needs, and see what's out there.
Please don't do option 1 or 2 if you can't get a loan for the full amount. That sounds scary.
posted by hydra77 at 12:07 AM on March 13, 2022 [9 favorites]
Please don't do option 1 or 2 if you can't get a loan for the full amount. That sounds scary.
posted by hydra77 at 12:07 AM on March 13, 2022 [9 favorites]
My mum is selling up for a smaller place and offered to split a larger place with us on the proceeds as a duplex, adding a kitchenette up top for herself
Just a small note that for things like this it's worth thinking about her needs as she ages (e.g. at some point, having to negotiate stairs might be a problem).
posted by trig at 4:07 AM on March 13, 2022 [7 favorites]
Just a small note that for things like this it's worth thinking about her needs as she ages (e.g. at some point, having to negotiate stairs might be a problem).
posted by trig at 4:07 AM on March 13, 2022 [7 favorites]
Option 3 is really it. If your in laws can’t afford to lend you the money without worry, it’s not okay.
posted by warriorqueen at 4:17 AM on March 13, 2022 [3 favorites]
posted by warriorqueen at 4:17 AM on March 13, 2022 [3 favorites]
Yeah, if you get along well enough with your mother that 3 sounds pleasant, it seems like your best plan. Additional advantage is that as she ages, it’ll be easy and convenient to give her whatever support and attention she needs. I would think hard about finding a setup with maximum accessibility for both apartments and privacy from each other, but other than that it seems like the way to go.
posted by LizardBreath at 5:37 AM on March 13, 2022 [6 favorites]
posted by LizardBreath at 5:37 AM on March 13, 2022 [6 favorites]
I just wanted to add detail - unless you are in a very highly regulated country, whatever amount banks will lend you for a mortgage is probably more than will be comfortable. There are exceptions for sure, like if you have a thriving business or are guaranteed promotion in the future. But houses are expensive and come with repairs and other costs. Additionally, interest rates are likely to go up.
So if a bank mortgage won’t get you there, you may well end up very financially stressed if you’ve taken on additional family-based loans. If that family could lend you the money easily, it might not be a big deal. But this doesn’t sound like that.
posted by warriorqueen at 6:01 AM on March 13, 2022 [3 favorites]
So if a bank mortgage won’t get you there, you may well end up very financially stressed if you’ve taken on additional family-based loans. If that family could lend you the money easily, it might not be a big deal. But this doesn’t sound like that.
posted by warriorqueen at 6:01 AM on March 13, 2022 [3 favorites]
Also - the bank is going to consider the family loans like any other debt, so it doesn't really buy you anything other than the stress of owing money to family. If you can't afford to borrow it from the bank, you can't afford it from family either, from the bank's POV.
posted by COD at 6:27 AM on March 13, 2022 [3 favorites]
posted by COD at 6:27 AM on March 13, 2022 [3 favorites]
Your primary goal right now is to get out of the apartment you don't like. So cross 2 and 4 off the list because they won't solve that problem (I assure you, a long commute will significantly reduce your quality of life).
1 is pretty dangerous because you would be taking on an unsustainable amount of debt, and is risky for your in-laws as well. It also sounds like you really want a larger place, so it may not solve your current problem.
That leaves 3 and 5. 3 sounds good if you like being close to your mum. Renting possibly forever is also not a bad thing and saves you a ton of homeownership responsibility. So think on why specifically you want to buy a home, and which of these two options best serve you.
posted by metasarah at 6:49 AM on March 13, 2022 [5 favorites]
1 is pretty dangerous because you would be taking on an unsustainable amount of debt, and is risky for your in-laws as well. It also sounds like you really want a larger place, so it may not solve your current problem.
That leaves 3 and 5. 3 sounds good if you like being close to your mum. Renting possibly forever is also not a bad thing and saves you a ton of homeownership responsibility. So think on why specifically you want to buy a home, and which of these two options best serve you.
posted by metasarah at 6:49 AM on March 13, 2022 [5 favorites]
Going with Option 3 could also be very helpful if you have children at some point in the future.
posted by Johnny Assay at 7:38 AM on March 13, 2022
posted by Johnny Assay at 7:38 AM on March 13, 2022
Also - the bank is going to consider the family loans like any other debt, so it doesn't really buy you anything other than the stress of owing money to family. If you can't afford to borrow it from the bank, you can't afford it from family either, from the bank's POV.
The way people I have known have resolved that is by calling the money from family a gift rather than a loan. That's probably fraudulent from the bank's perspective, but it is what let them make the transaction so that is what they did.
Of the options listed, #3 sounds the best to me, assuming you can find a location that works well for non-drivers (and with your mother aging, at some point you will have three non-drivers). I know a couple of people who have done this in places with absurd property prices, and it seems to be working well for them.
Being able to make your new place more accessible for your spouse will be huge in terms of quality of life in the future. That alone would tip the balance for me in favor of buying rather than renting.
posted by Dip Flash at 7:43 AM on March 13, 2022 [3 favorites]
The way people I have known have resolved that is by calling the money from family a gift rather than a loan. That's probably fraudulent from the bank's perspective, but it is what let them make the transaction so that is what they did.
Of the options listed, #3 sounds the best to me, assuming you can find a location that works well for non-drivers (and with your mother aging, at some point you will have three non-drivers). I know a couple of people who have done this in places with absurd property prices, and it seems to be working well for them.
Being able to make your new place more accessible for your spouse will be huge in terms of quality of life in the future. That alone would tip the balance for me in favor of buying rather than renting.
posted by Dip Flash at 7:43 AM on March 13, 2022 [3 favorites]
I am in the process of doing number 3, and we made sure that the choice of house had a ground floor for the parents, rather than an upstairs, and also renovated the bathroom for accessibility, made sure everything was as senior-friendly as possible, etc. At some point, that part of the house will be my retirement location as well, as a result.
Integrating will be tough, but in the long-run, this is going to be the best solution for everyone.
posted by instead of three wishes at 7:57 AM on March 13, 2022 [4 favorites]
Integrating will be tough, but in the long-run, this is going to be the best solution for everyone.
posted by instead of three wishes at 7:57 AM on March 13, 2022 [4 favorites]
Option 3 is the best of the list.
posted by shadygrove at 9:36 AM on March 13, 2022 [1 favorite]
posted by shadygrove at 9:36 AM on March 13, 2022 [1 favorite]
It’s interesting to me how many people are suggesting option three. I threw it out immediately because the prospect of sharing ownership of my house with my mother (who I adore) sets off very large alarm bells.
If you’ve never owned a house I suspect you don’t know how personal it can become.
For starters it dominates your financial life. The pressure of maintaining a mortgage can be very overwhelming at times for a couple and if you add a third party it will just make things worse. And if that third person is someone’s mother the possible complications go off the chart.
Similarly there is the massive remodel you’re proposing. Remodels cause divorces. Not all of them of course, but when things start to go wrong and you’ve been without water for three days tempers will flare. Once again it’s hard with just two people much less a third, and much much less a third that is someone’s mother.
Even just loaning money to family members is a minefield. Going in on property together is, for me, a big red button that says "Do Not Push."
posted by Tell Me No Lies at 10:33 AM on March 13, 2022 [4 favorites]
If you’ve never owned a house I suspect you don’t know how personal it can become.
For starters it dominates your financial life. The pressure of maintaining a mortgage can be very overwhelming at times for a couple and if you add a third party it will just make things worse. And if that third person is someone’s mother the possible complications go off the chart.
Similarly there is the massive remodel you’re proposing. Remodels cause divorces. Not all of them of course, but when things start to go wrong and you’ve been without water for three days tempers will flare. Once again it’s hard with just two people much less a third, and much much less a third that is someone’s mother.
Even just loaning money to family members is a minefield. Going in on property together is, for me, a big red button that says "Do Not Push."
posted by Tell Me No Lies at 10:33 AM on March 13, 2022 [4 favorites]
Even just loaning money to family members is a minefield. Going in on property together is, for me, a big red button that says "Do Not Push."
And on this note, how does spouse really feel about living in a house with your mother? Any minor tensions that exist are going to be a million times harder when you're all trapped in a house together.
posted by Blue Jello Elf at 11:11 AM on March 13, 2022 [4 favorites]
And on this note, how does spouse really feel about living in a house with your mother? Any minor tensions that exist are going to be a million times harder when you're all trapped in a house together.
posted by Blue Jello Elf at 11:11 AM on March 13, 2022 [4 favorites]
I have a friend who did option 3 and it worked out very well because they did very good boundary work with mom on the front end. They ended up selling about a decade down the road so mom could relocate to a better option in a different city, but by that time the house had appreciated so much that all parties could afford to buy where they wanted to (friend and spouse stayed in the same city).
posted by quince at 12:11 PM on March 13, 2022 [1 favorite]
posted by quince at 12:11 PM on March 13, 2022 [1 favorite]
Are there 2 family houses in the area where you live? Best decision ever for us was to have more than half the mortgage covered by tenants.
posted by never.was.and.never.will.be. at 3:53 PM on March 13, 2022 [1 favorite]
posted by never.was.and.never.will.be. at 3:53 PM on March 13, 2022 [1 favorite]
You really have two choices - 1 or 3. The market is NOT going to fall and you can't count on possible future pay increases. As a former long commuter (3 hours return per day), I know how much this can impact every part of your life and your WFH spouse is going to feel like they got a divorce.
Your choice is dependent on how well you and your spouse really get on with your mother in a always-under-each-others-feet way and on how well your in-laws can manage not having that money they lend you and having it drip-fed back to them even if they suddenly find they can't manage that.
Timing is also a factor - the longer you wait, the less likely you are going to be able to manage option 1.
posted by dg at 11:16 PM on March 14, 2022
Your choice is dependent on how well you and your spouse really get on with your mother in a always-under-each-others-feet way and on how well your in-laws can manage not having that money they lend you and having it drip-fed back to them even if they suddenly find they can't manage that.
Timing is also a factor - the longer you wait, the less likely you are going to be able to manage option 1.
posted by dg at 11:16 PM on March 14, 2022
In regards to air quality, I use a tool like AreaHub.com to look up locations and check on things like air quality and other environmental concerns.
posted by myndwalk at 6:40 AM on June 2, 2022 [1 favorite]
posted by myndwalk at 6:40 AM on June 2, 2022 [1 favorite]
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I’m also not sure how well buying an hour out of town is going to do for two non-drivers. Given that restriction you’re pretty much down to a small condo in central.
posted by Tell Me No Lies at 11:53 PM on March 12, 2022 [11 favorites]