To buy a house or live with MIL

posted 2 months ago in Beehive
Post # 16
Member
4304 posts
Honey bee
  • Wedding: October 2017

pinky88 :  

I took $4k out of my 401k for closing costs but then I found a new job. The 401k loan didn’t transfer over and I got hit with taxes and fees. Didn’t he just start back at his job? Make sure he knows that you will be hit with nasty taxes and fees if he finds a new job before the loan is paid off

Post # 18
Member
3545 posts
Sugar bee
  • Wedding: July 2018

 

pinky88 : It seems odd that only a month ago you had no savings and either needed your Mother-In-Law to sell her home or gift you her inheritance, now a month later you have always had 90k. 

“we don’t have the money for a down payment since we blew it all on vacations, renovations, dining out, etc. you are all right, we will save up our own money and hopefully buy something of our own soon.”

This was your comment only 4 weeks ago? 

You are probably scared because it is a big commitment and you can’t quite afford it.  That said, you live in a hcol area and that is the case for a lot of people when they purchase their first home.  You haven’t been paying rent or saving for this downpayment so you and your husband need to be very careful and strict with yourself. You need to sit down and work out a budget.  Go through your new expenses, how much your mortgage is, house bills, other essential bills and figure out how this is going to work.  How much have you taken from your husband’s 401k?  Whatever you have taken you need to set up a payback plan from the first month the house goes through, you are only stealing from yourself.

You have a decent household income, you just aren’t really used to expenses or bills yet.  Owning a home can be a blessing but it could also be a 900k noose around your neck.  Be smart and build your savings back up, you can still enjoy yourselves but you need to scale it back a bit. 

Post # 22
Member
4304 posts
Honey bee
  • Wedding: October 2017

pinky88 :  

They will send you a statement for your tax return, it will count as income because it won’t be a loan anymore. It surprised me and mine was a small amount 

Post # 23
Member
5425 posts
Bee Keeper

If your parents aren’t paying for your house they don’t get a vote. Take some time to build up savings before TTC. If your H suffers from anxiety build a nice cushion–home ownership often comes with surprise expenses and there aren’t many things more anxiety-causing than having a child you cannot afford. 

Post # 24
Member
777 posts
Busy bee
  • Wedding: October 2019

Honestly, I’d wait to ttc. Sounds like you and your husband are on rocky footing and have been before you got married. Get settled, save for medical bills, pay back the 401k…. then get pregnant if y’all are getting along. Babies are a blessing, but stressful and can rip arelationship apart if not on firm ground.

Post # 25
Member
1052 posts
Bumble bee
  • Wedding: September 2017

Just from an economical and financial perspective, this is a bad idea. The market is headed into a downswing. New construction & luxury homes are almost always the homes that see the most value lost. If anything happens and you need to sell this house in the next few years, even up to 6-7 years from now, you’ll likely take a loss.

I‘m sure you know this, but to reiterate, without considering taxes, your mortgage will be about $4,400/month. A house of that price in my area would have taxes of about $22,000/yr. This brings your monthly payment to about $6,200. And that doesn’t include utilities (and HOA if applicable). 

 

Why do you need such an extravagant home? I’d bet my own money that you can find a house of the same size, in that neighborhood, just older, for 1/2 or  3/4 of the price. And lower taxes, because again, at least where I am, new construction has the highest taxes. (North NJ, NYC suburbs for reference). If you found a house for half, you could do the entire 20% down, get a lower interest rate and a wildly lesser monthly payment. 

 

Just a realtor’s opinion. I always give my clients options and hopefully they make a smart decision. 

Post # 26
Member
4299 posts
Honey bee

I don’t want to  be a downer but the taxes on taking money out of your 401k are huge! You will pay up the nose for that. I would instead “pretend ” to pay mortgage to yourself and save up that way. 

Post # 27
Member
9083 posts
Buzzing Beekeeper
  • Wedding: October 2016

You’re adults. Go find your own housing situation that doesn’t include living with Mom.

Post # 28
Member
4304 posts
Honey bee
  • Wedding: October 2017

sweatergal007 :  

You can take out a loan, which I’m wondering if that’s what they did. I got hit with taxes because I left that job and they wouldn’t let me pay the loan back. It counts as income so the taxes are 25% on top of numerous other fees. If I paid the loan off, I wouldn’t have been taxed

Post # 29
Member
5842 posts
Bee Keeper

pinky88 :  if I’m reading this right the 401k loan is from his previous employer? It’s almost unheard of for plans to allow that (loans are for current employees) so make sure he isn’t taking an early withdrawal because that will definitely rack up taxes and fees.

Is $900k reasonable for your area or can you find something cheaper? I ask only because stealing from your retirement to only make a 10% downpayment isn’t what I would consider affordable. 

Post # 30
Member
1663 posts
Bumble bee

mrscb2bee :  Just for reference, a $900k home is not a luxury home in some areas. In HCOL areas like where I live, it’s most likely a condo or townhouse that’s a fixer upper.

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