My parents immigrated to United States from a 3rd world country nearly 30 years ago and had always dreamt of owning a home. They’ve made many financial sacrifices to raise me and my sister while my father had to build his way up to a stable career. We’ve been living in an apartment since their move to the US.
Now my parents want me to help them purchase a house in CA. I (26 yo) with annual salary of $93K will be co-signing with my father (60 yo) $130K.
My mother (67 yo) is unemployed and my sister (31 yo) will pay rent for the next year or two before moving in with her fiancé. My friend has also agreed to renting a room for years to come (work location purposes). The agreement is that I will eventually become the owner when my parents pass.
My girlfriend’s situation is much different. Her primary home in wealthy neighborhood is currently being rebuilt. Her parents also own a secondary home that is rented out to pay for bills and they live in a third home in another state. So this would not be her 1st home.
I’ve been living in an apartment with my girlfriend for about a year now and we always talk about how wonderful it would be to own a house together. I realize this is my chance to help my parents achieve their dream but I also understand this decision will make it difficult for me to purchase a home with my significant other for the foreseeable future.
Any advice would be appreciated…
I would def not co-sign for my parent to buy a house, especially in a HCOL city.
If you ever want to buy with your Gf you can’t co-sign for your dad the DTI ratio will be too high. *Random Thought * might your GF may just inherit something and you two won’t have to buy?
SoCal is expensive so I know $93k in SoCal doesn’t go as far as it doesn’t as far as in NorCal.
You might want to post on a sub that understands your culture like /r/abcdesis if you’re south asian or whatever your respective sub is.
People from western cultures tend to be way more individualistic and untrusting of their family members. It’s important to be careful but you need to balance against your own conscience.
Can your girlfriend qualify for a mortgage on her own in the future?
No. You make a nice salary but you are not rich/wealthy. You cannot afford to help. Good intentions mean nothing. Life happens and plans change.
I trust the bank’s judgment on financial risk vs his child. If Dad has a stable career then they will qualify on their own.
Has your dad tried to qualify on his own?
>I (26 yo) with annual salary of $93K will be co-signing with my father (60 yo) $130K.
Know that by co-signing, you are putting your credit in the hands of others.
Any missed or late payments will end up on your credit report. And as you realize, by the time you set out to get your own mortgage, your DTI will be much higher.
All it takes is for a job loss, a tenant (your sis) failing to pay, or other debts to pile up, and all of a sudden the lender is calling you up to make payments on the mortgage.
Also, know that once you’re on the mortgage, getting your name off of the mortgage will be *very* difficult, especially because interest rates are rising and a refi to remove you will likely mean a higher APR, meaning a larger mortgage payment each month.
There are ways to help your parents get into a home… but no sacrifice made by parents is worth putting your credit on the line into such an asset with a long-term commitment.
And if God forbid your dad gets sick and passed, the home would be 100% your responsibility, as your mom has no income. Does he have sufficient assets to pay the house off if he passes?
If you want to own your own home then no
Your salary cannot afford two mortgages in California.
My wife’s parents came from Sri Lanka and they always rented and migrated over so their daughter could have a better life.
>I (26 yo) with annual salary of $93K will be co-signing with my father (60 yo) $130K. My mother (67 yo) is unemployed and my sister (31 yo) will pay rent for the next year or two before moving in with her fiancé.
This sounds like a financial mess….$93k in CA is not that much and qualifies for government assistance in some places. You are not in a financial place to be buying/co-signing your parents a house in the most expensive state in the US. Why doesn’t your mother work if your parents are interested in getting a home?
Your father will be 90 by the time a 30-year mortgage is paid off. What do you think the chances are that he’ll be earning $130k and making mortgage payments until he’s age 90?
How much is that house worth that your dad wants to purchase?
When do you estimate you’d want to buy a house with your SO?
Will your name be on the deed prior to your parents’ passing? Or just on the loan?
Looking at this this morning, I don’t necessarily think your parents would need you to buy a house. Once your mom finds a job, their household income will be *at least* $120k. That could be enough for them to finance a house in a less expensive neighborhood in California, if it is something that is important to them.
After they retire, they will also be less tied down to a particular location and can explore less expensive areas.
Everyone here will tell you to never buy a house with anyone other than your spouse. That said, i did exactly what you’re proposing. I find it hilarious how everyone is so cut and dry on this topic even though every day there’s posts like “my spouse hid $30k in debt from me”. I feel like families that are close enough that you’d even consider helping them in this way means you also trust them very much to not screw you over, and you’ve probably had a transparent conversation about money (what they have, where it is, etc).
The standard labels of risk apply obviously, but if you’re comfortable with that and understand that you should assume you’re liable for the full loan, then do it. My situation was slightly different because we already own our own home, and the co-sign amount of 60k was less than 20% of our household income, so we could easily afford to do it and cover the payments if something happened. Your income might not afford you that luxury.
Also, now would be a great time to talk with an estate planner. Make sure the deed is written up as joint right of survivorship with everyone’s name on it. That way if something happens to your parents, the house doesn’t become part of their estate, it instantly transfers to you.
This sounds like a train wreck of a situation. You don’t really break down the entire budget situation, but it sounds like you can only afford this home with the combined income of you, your father, and this friend who will rent a room. So what happens when your father cannot work anymore, but will still need to live in the house? Or if your friend decides to move out? Can you comfortably afford the home on your own? If not, you really shouldn’t do this. Because the reality is that your dad is 60. How many more years do you expect him to be able to work? And you cannot rely on your sister’s rent for the long term. So in the very near future, you will be responsible to carry this $5500+ monthly payment. Very little chance that works with a $93k salary. Or, if your real intention is to buy a home with your GF, you will have zero chance of qualifying for financing there. I don’t see you being able to help with the financing of another home when you’re already on a $800k home mortgage with a $93k salary.
You mention in a comment that the desired house is about $800k. That makes this idea insane. Just running the numbers….if your dad had 20% to put down ($160k), the mortgage payment would still come out to about $5500/month. Possibly more, depending on taxes. And that’s assuming he’s got 20% down. Very little chance that somebody making $130k can afford that payment. Which will become your payment in the very near future.
The problem is you live in a horrendously expensive area, both you and your parents are not high earners for the location. The plan to purchase two homes for well over a million dollars between them on two decent incomes in CA is just not realistic no matter how you look at it. Combined, an 800k mortgage would be doable but that’s the only home your DTI is ever going to allow you to own. It’s straight-up insanity for your Mom and Dad to be looking to buy a house and get into an 800k, 30 year mortgage at 60 years old.
Why not help them get a home after they retire? They are plenty of houses which are much cheaper in other states. Like a million dollar home in CA is like small and very little but if you spend a million dollars in Texas or something you gonna get like 5 bed rooms and many other stuffs. 🤣
Possibly too late for them to start paying a mortgage specially in California, probably if they put 50% down on a modest house, I also wonder if reddit was around 30 years if he would ask should I buy a house or sacrifice myself on the education of my children?
Everyone’s responses has been insightful.
This gives a good perspective on things before I accompany my father later this week to a meeting with realtor & co.
I will hold off on co-signing anything for the time being.
If you were asking this question, and looking at a house in rural Kansas, on your salary, maybe. In the market you’re looking at – no chance in Hades.
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