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  • Buying 675k Beach House

    Fed Student Loans 490k

    1099 full time income 350k now and probably will work less and make 300k

    Taxable 135k placed in early Jan. worth 128k now.

    Cash 50k
    Solo 401k 40k
    BDR 6k

    Expenses: 5k a month, 3k of that is rent.

    I want to buy a beach home in Florida in one of the many famous beach towns; where i live now (i will live in this city for the rest of my life) and I locum for weeks at a time and come back home for a week at a time. The house is probably 600 feet from the beach, its a duplex 2/1 + 1/1. I can see me living in one side and charging 2k for someone to rent long term on the other or use it just for airbnb in the winter months. Asking price is 675k, i can get a loan with 0% down and no PMI. Is this a bad idea?

  • #2
    I hope you didn’t find this place on Craigslist.

    Comment


    • #3
      wait for it. ..


      Simple answer: no.

      Underwriting probably won't let you anyways. -- did you even get prequal to run the numbers?

      Comment


      • #4
        Originally posted by StarTrekDoc View Post
        wait for it. ..


        Simple answer: no.

        Underwriting probably won't let you anyways. -- did you even get prequal to run the numbers?
        better.com pre-qualified me but for a conventional mortgage, i spoke to some of the banks on wci map in my state and a few said on the phone they have worked with 1099 docs before and would probably be able to service me for 0% down as well.

        Comment


        • #5
          Do it!
          what could go wrong?🤦‍♂️

          Comment


          • #6
            locums pays for housing while away? big investment for a place to stay about 3 months per year total. nervous about florida real estate now after 2008 drop, never mind hurricanes and porous ground.
            “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

            Comment


            • #7
              Originally posted by blippi View Post
              locums pays for housing while away? big investment for a place to stay about 3 months per year total. nervous about florida real estate now after 2008 drop, never mind hurricanes and porous ground.
              Locums does pay for housing while away, and rental car, and flights.

              I've lived in this part of florida all my life, hurricane direct hit once 40 years ago, place still here (home built in 1970. Ive been told florida would be underwater when i was in elementary school in 30 years, yet here we are. Florida real estate was already better before covid.

              Other reasons, homestead asset protection in florida, tax deduction for mortgage interest.

              Comment


              • #8
                Debt to income ratio ideally shouldn’t be >2:1, this would put you at 4:1.

                If you buy this house, you should probably work more, not less.

                Comment


                • #9
                  Are you going for PSLF? Nearly $1.2M in debt on a $300k income is less than exciting especially with minimal retirement savings.

                  Comment


                  • #10
                    Originally posted by CordMcNally View Post
                    Are you going for PSLF? Nearly $1.2M in debt on a $300k income is less than exciting especially with minimal retirement savings.
                    No PSLF. I'm 1.5 years out of residency.

                    Comment


                    • #11
                      Not gonna do it. Wouldn’t be prudent.

                      Comment


                      • #12
                        Originally posted by Craigslist View Post

                        No PSLF. I'm 1.5 years out of residency.
                        Underwriting:
                        • Debt to income ratio 43%, (this is payments to income)
                        • housing ratio 28% (property, insurance, HOA)
                        • 2 years of tax returns to verify your income. 1099 income is extremely difficult for you with your track record.
                        Better.com is very aggressive. What your communication was soliciting a loan application. You did not get an approval with all the closing costs. You will have upfront points and a final rate when you apply for financing IF you get approval..
                        Even if you can swing it, don't do it.

                        Rule of thumb, mortgage max 2x gross and housing 20%-25% of gross.
                        You need to identify is the taxable is all for house fund or for retirement.
                        Work another year and save enough to get enough for your total debt to be 2 x gross.
                        Debt $1,185
                        Target $600
                        ONLY $585 short.
                        That is the rule of thumb answer.
                        Take your annual income gross and actual figure out how much you can afford. You will come to the same answer. Make sure you have LTDI. and an umbrella. You will need it if you rent out at all.
                        Just painting a picture to avoid a "helpful lender" from putting you in a box. Do not do this.

                        Comment


                        • #13
                          A) eye watering amount of debt
                          b) gotta live somewhere
                          C) is this the right time in your life?

                          Comment


                          • #14
                            Originally posted by Tim View Post

                            Underwriting:
                            • Debt to income ratio 43%, (this is payments to income)
                            • housing ratio 28% (property, insurance, HOA)
                            • 2 years of tax returns to verify your income. 1099 income is extremely difficult for you with your track record.
                            Better.com is very aggressive. What your communication was soliciting a loan application. You did not get an approval with all the closing costs. You will have upfront points and a final rate when you apply for financing IF you get approval..
                            Even if you can swing it, don't do it.

                            Rule of thumb, mortgage max 2x gross and housing 20%-25% of gross.
                            You need to identify is the taxable is all for house fund or for retirement.
                            Work another year and save enough to get enough for your total debt to be 2 x gross.
                            Debt $1,185
                            Target $600
                            ONLY $585 short.
                            That is the rule of thumb answer.
                            Take your annual income gross and actual figure out how much you can afford. You will come to the same answer. Make sure you have LTDI. and an umbrella. You will need it if you rent out at all.
                            Just painting a picture to avoid a "helpful lender" from putting you in a box. Do not do this.
                            Thank you Tim (and others, I poised this question knowing I would probably get rekt'd. I was looking at it in the sense that I'm already paying rent and I will live here long term, with no intentions of marriage or family so why not buy and get tax deductions and the asset protection florida homestead offers).

                            Taxable is all house fund or student loan bolus. I'll probably owe 30-40k in taxes (already contributed 55k from w-2 before i quit mid 2021), not sure yet haven't received all my 1099s.

                            I have LTDI with 5k a month coverage because i can't increase until I have 2 years of 1099 per Bob Bhayani's reps. and thank you yes ill get umbrella either way whether i do this or not.


                            Comment


                            • #15
                              Originally posted by Craigslist View Post

                              Thank you Tim (and others, I poised this question knowing I would probably get rekt'd. I was looking at it in the sense that I'm already paying rent and I will live here long term, with no intentions of marriage or family so why not buy and get tax deductions and the asset protection florida homestead offers).

                              Taxable is all house fund or student loan bolus. I'll probably owe 30-40k in taxes (already contributed 55k from w-2 before i quit mid 2021), not sure yet haven't received all my 1099s.

                              I have LTDI with 5k a month coverage because i can't increase until I have 2 years of 1099 per Bob Bhayani's reps. and thank you yes ill get umbrella either way whether i do this or not.
                              Another rule of thumb: Gross - taxes - 20% retirement = Spending
                              I don't care where you pay student loans or a house fund or a mortgage. By the way, the mortgage company does not either. They own the house until you payoff the mortgage. They are NOT your friend for taxes or retirement savings or actually for the mortgage. The house is not a protected asset for the lender's security.

                              Comment

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