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My sister is going to be asking me for money and I am not sure what to do.
She is married with two small kids, and lives in a townhouse which she bought in 2008 for about $365k with an FHA loan and a 3.5% down payment. The place is now valued at around $275 and she is underwater on the mortgage. She and my brother in law have a combined HH income of about $130K but they are deeply in debt for car loans, credit cards, etc. They are the kind of people who want their kids to have everything and spend way beyond their means. There have been many times when they have had to borrow or have yard sales to buy groceries and pay bills. They live paycheck to paycheck with no savings.
She recently told me that she found a house she wants--large, new construction, $15k down gets you $475K with builder financing. She is very excited and already planning to put her current house on the market but is concerned that it won't sell for what she paid (it won't-- they have done zero in updates and it was overvalued when they purchased it). She has broadly hinted that she might be asking me to "help" and sending me pictures of the model home (the help I am sure would be in the form of a $15K down payment to secure her lot).
I crunched the numbers with her to show her what he monthly payment would be, how much her taxes would be, etc, but this seems not to register. I do not plan to lend or gift her any money.
How do I stop this train? Is there even a loan she could get? Will $15K get you a $475K house? I am hoping she just gets turned down and forgets this idea.
I would tell her you will talk about helping her after if she completes financial peace university. I would gladly pay the $99. It teaches budgeting and living within her means. After she completes the course and she still wants to buy the home, I would tell her no. If she didn't get it, she never will.
If you give in to this madness, your not helping her. Your enabling her to hurt herself financially even more. When you give an alcoholic a drink. Are you helping them? No.
And yes, its possible for her to get that $475k house for around a $15k down payment.
I would tell her you will talk about helping her after if she completes financial peace university. I would gladly pay the $99. It teaches budgeting and living within her means. After she completes the course and she still wants to buy the home, I would tell her no. If she didn't get it, she never will.
If you give in to this madness, your not helping her. Your enabling her to hurt herself financially even more. When you give an alcoholic a drink. Are you helping them? No.
And yes, its possible for her to get that $475k house for around a $15k down payment.
I don't understand how this is possible. Doesn't she still need a loan where her debt to income ratio is explored?
Regardless of if anyone decided to loan to her with $15K down, the bigger issue is should she be buying this house?
Based on the few paragraphs you've written here, I would strongly suggest NOT getting drawn into this. I would predict that you'll never see your $15K again, and they would be a job loss away from losing the house.
Seems like her and her husband have champagne dreams on a beer budget. Help them realize this
Regardless of if anyone decided to loan to her with $15K down, the bigger issue is should she be buying this house?
Based on the few paragraphs you've written here, I would strongly suggest NOT getting drawn into this. I would predict that you'll never see your $15K again, and they would be a job loss away from losing the house.
Seems like her and her husband have champagne dreams on a beer budget. Help them realize this
I absolutely agree and am not intending to lend her a penny.
My thought is that there are systems in place to review the qualifications of potential buyers and stop such an ill-advised decision. How is it possible that someone with this sort of financial profile would even get financing? I hope that the bank or builder will just turn her down cold.
How is it possible that someone with this sort of financial profile would even get financing? I hope that the bank or builder will just turn her down cold.
Predatory lenders looking for a quick commission. Maybe an interest only ARM loan, short sale the old house, etc. For everyone who says its not possible, there is a scumbag loan officer will prove you wrong.
And since its financed by the builder, they can do whatever they want.
I absolutely agree and am not intending to lend her a penny.
My thought is that there are systems in place to review the qualifications of potential buyers and stop such an ill-advised decision. How is it possible that someone with this sort of financial profile would even get financing? I hope that the bank or builder will just turn her down cold.
You've done more than I would have done.
From now on, just listen and nod. STICK with your plan of not loaning her anything.
My sister is going to be asking me for money and I am not sure what to do.
She is married with two small kids, and lives in a townhouse which she bought in 2008 for about $365k with an FHA loan and a 3.5% down payment. The place is now valued at around $275 and she is underwater on the mortgage. She and my brother in law have a combined HH income of about $130K but they are deeply in debt for car loans, credit cards, etc. They are the kind of people who want their kids to have everything and spend way beyond their means. There have been many times when they have had to borrow or have yard sales to buy groceries and pay bills. They live paycheck to paycheck with no savings.
She recently told me that she found a house she wants--large, new construction, $15k down gets you $475K with builder financing. She is very excited and already planning to put her current house on the market but is concerned that it won't sell for what she paid (it won't-- they have done zero in updates and it was overvalued when they purchased it). She has broadly hinted that she might be asking me to "help" and sending me pictures of the model home (the help I am sure would be in the form of a $15K down payment to secure her lot).
I crunched the numbers with her to show her what he monthly payment would be, how much her taxes would be, etc, but this seems not to register. I do not plan to lend or gift her any money.
How do I stop this train? Is there even a loan she could get? Will $15K get you a $475K house? I am hoping she just gets turned down and forgets this idea.
The main question I have for her is "What the Hell are you talking about??"
Also "Can I have some of the cocaine from the mountain of cocaine that you are obviously ingesting?" That's another question for her.
She is going to lose the deposit with the builder, then lose the present house with the FHA loan, then be renters.
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