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Hi all- new here...
i'm trying to move out of my parents house
a few friends (2) and myself are looking to buy a house somewhere in nassau county, preferably the western area.
1 goes to school in flushing, one in manhattan, and one in hempstead. we are thinking of taking other's in to split costs, but wouldn't want more than 4 or 5 people living in the house.
i am thinking of purchasing the house and then collecting money weekly for expenses kind of like a rooming house, but it won't be split like that.
i figure weekly is better than monthly because if someone can't make a weeks rent, it's easier for me to cover them than for me to cover a whole months rent.
how much do you think the cost of living/maintaining the house would be?
i have no idea what towns to look in but i know that i'm hoping to find something with at least 4 bedrooms and 2 bathrooms for under 600,000. i know that sounds like a steal on long island, but it's a buyers market and the areas do exist. i'm also interested in foreclosures.
could you guys let me know your average heating bills, electric bills, phone, internet, cable, water etc?
i'm trying to do as much research as possible before i actually start going to open houses.
(the reason i don't want to rent is because if rent is 2000 a month, and i live there for 4 years that's 96000 and i feel like i might as well own something for that kind of money. i have good credit but only make about 23,000 a year..... same goes for my friends, but costs will be split at least 3 ways)
With a salary of 23K a year, you're not going to get a mortgage. The days of banks handing out mortgages like candy on Halloween are long gone. I don't even think a bank is going to go the route of you and 2 friends getting a mortgage together unless you all have platinum credit and a hefty down pmt (20% minimum).
Also, why would you want to purchase a home and have 4 or 5 other young people living in it? 1. The house would probably be dogged within a short time 2. Can you absolutely depend on them to keep up their end of the bills, etc? 3. Having to depend on others' to make sure you can make your mortgage pmts is NOT a good way to live (willl cause you A LOT of stress)
Finally, there is a lot more to owning a home than just a mortgage and electric bill.. You'll have mortgage, LIPA, oil, taxes. You'll have repairs, maintenance, etc. Owning a house is a HUGE committment that takes a lot of money to do. People here have said it costs them upwards of 5K a month just to make the bills for their house (not including their groceries, gas, LIRR, clothing, etc)
I hope some home owners chime in on this. I'm a renter simply because I know that I cannot afford the expense of owning a home and I don't want to have tenants.
Dont do it. What happens when your friends lose their jobs?
Not only that but how are you going to get a mortgage making $23,000 a year? All around its just a bad idea. Wait till your finished with school, get settled into a permament job then look into buying.
The other thing is, in your post you say that you and 2 friends are thinking of buying a house together.... Do you realize a mortgage is a 15-30 year commitment????? What happens when you guys have a falling out? What happens if one of you get married? Are you prepared to buy out the other 2 if a sitation arises?
I think your best bet is to do what you can afford and, at 23K a year, that would be to rent a 1BR or a studio apartment on your own until you graduate college and have a good paying job ---- a $10/hr job is barely enough to cover a rental, no less an entire house!
I commend you for seeing the logic of owning a house and having equity in something, rather than throwing away $25K+ a year on rent. However, the other posters are correct when they say that unless you have a big chunk of money to put down, you aren't going to get a mortgage if making only 23K a year. Did you mean 23K gross pay, or 23K after taxes? But either way it won't happen (my SO's friend is making 50K/yr gross, has perfect credit, is putting 75% down, and it still was not a slam-dunk for him to get a 125K mortgage commitment).
Here's another alternative for you. Have you sat down with your parents and explained your reasons for wanting to invest in owning your own home, i.e. the wastefulness of renting? IMO they should applaud your good sense for wanting to do that. You didn't mention whether your parents own their own home free and clear (paid up mortgage) but if they do, or if they have the option of taking out a home equity line of credit or home equity loan, perhaps you could structure a deal whereby they would hold the mortgage on a house that you buy. Normally I think that financial dealings between family members are the kiss of death BUT depending on your particular family situation it sounds like it might be the best way to go.
Naturally you'd be more comfortable with a totally noninvolved entity like a bank 'owning a piece of' your house (parents holding the mortgage is a form of control, even if only a psychological one) but if the choice is between throwing money away on rent, continuing to live under the same roof as your parents (which I know for a '20something' is not the best thing for EITHER side involved! ), or owning a house that has your name on the deed with your parents as lienholders .... the third option sounds like the most sensible. Your parents can also charge you SLIGHTLY less interest than the going rate from a bank; you need to check with an accountant or the IRS website to find out what that rate is. It's called the 'Blended Rate' and it's designed specifically for loans between family members.
If you find yourself getting really uncomfortable with your parents holding the mortgage, then as your salary increases over the coming years you could always then obtain a conventional mortgage (refinance) at that point and pay your parents off. Anyway, by that time you will probably want to sell your first house and buy another, at which point you'd pay off the loan from your parents from the proceeds and then start anew: Get a regular mortgage for whatever house you buy.
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My fiance and I make around 110k together and even we're struggling to get a house on Long Island because of the high down payments required. If it's difficult for us, I can't imagine how difficult it would be for you. I don't think you would get approved for a house. It also isn't that good of an idea to go into such a commitment with a few friends. You never know what will happen with them. I graduated college a year ago, and I no longer speak to half of my friends then. But I know how you feel about wasting money on rent. I'm renting right now and I feel like it's a waste when we both make decent salaries. But, in tough times like these when it's hard to get a good loan from a bank, you have to rent for a little while.
'Under section 7872 of the Internal Revenue Code, there is interest imputed to "below market loans" between family members, employers and employees, corporations and shareholders, and in other situations. To simplify calculations of interest for demand loans, I.R.C. section 7872(e)(2) allows the use of a "blended annual rate" for demand loans with a fixed principal amount outstanding for an entire calendar year. According to Rev. Rul. 86-17, 1986-1 C.B. 377, the blended annual rate is the product of (a) one half of the January semiannual short-term applicable federal rate times (b) one half of the July semiannual short-term applicable federal rate. This blended annual rate is published by the Internal Revenue Service in a Revenue Ruling every June, based on the relevant rates for January and July of that year.'
The Blended Annual Rate for the rest of 2008 is 2.80%. So your family could use that rate for a mortgage given to you between now and December 31 2008. If anyone is interested, an archive of the rates is here: Blended Annual Rates for Demand Loans under Section 7872
It also isn't that good of an idea to go into such a commitment with a few friends.
I would definitely NOT enter into a major purchase or financial agreement with friends. Even renting an apartment with a friend or SO has its pitfalls if both names are on the lease. My sister and her then-BF rented an apartment two years ago and she made the mistake of letting him have his name on the lease in order to 'improve his credit rating'. Well, they broke up after six months and when the lease was up she decided to move to a less expensive place; but the apartment management company insisted that both she and her ex-BF sign the document stating that "they" were not renewing. Just to be nasty, her ex refused to sign (just to make problems for my sister). It cost her $1200 to get a lawyer to have his name removed from the lease without his written consent. So be warned: NEVER share legal ownership, even with an apartment lease, if you can possibly avoid it. It's always a potential can of worms. Keep ownership, responsibility, and control in your OWN hands instead.
Like everyone said don't do it. In addition I don't think any financial institution would give you a loan when the cosigners are just friends. A wife, or family member maybe but not friends.
As you questions about costs to own, I rent out a house which was built in 1956, has oil heat and paid 450K. My monthly cost which includes mortgage, insurance, taxes, electricity, oil, and gas is 3.5K. I collect 3.6K in rent so I barely break even. Though the depreciation does give me a nice write off every year
You will not get a mortgage.........you would have in 2005!
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), or owning a house that has your name on the deed with your parents as lienholders .... the third option sounds like the most sensible. Your parents can also charge you SLIGHTLY less interest than the going rate from a bank; you need to check with an accountant or the IRS website to find out what that rate is. It's called the 'Blended Rate' and it's designed specifically for loans between family members. 
IRS Blended Annual Rate
