Me and my wife are in a really dynamic situation at the moment and it’s a little stressful but I think it may be a huge opportunity. We are both in our 20s and have been married for about 6 months. A couple months ago she was laid off from her full time position (\~55k a year salary). She has a part time job as a college instructor making about $1400 a month. She is more than likely going to be offered a full time position next semester at the college and would make approximately 60k a year, with the opportunity to make more if she picks up teaching extra classes. I have a solid government job making about 42k a year. She has almost no credit history, less than a year but a score in the mid 700s with no debt. I have a much more established history with no missed payments, multiple account types, but an extremely high utilization rate. That’s driven my score down the last few years and I’m at about a 630, but has been climbing this year. My biggest problem is debt to income ratio, total debts including a truck, 2 credit cards, a student loan, and a personal loan total $32,500. The good news with my debt is that my truck (biggest monthly payment and about $6700 of the total debt) pays off in February. And the really really good news is that my parents recently moved out of state and have yet to sell their house.
They owe about $190k on it with a 2.75% interest rate and the mortgage is fully assumable. The houses value is about 290-300k (realtor and Zillow estimates). My dad has offered for us to assume the mortgage should my wife get the full time position at the college, and he isn’t asking for anything else on top, just letting us assume the mortgage. The mortgage payment is about $250 more a month than we pay in rent now but all other expenses would stay the same. The problem with the house is right before they moved out of state 2 of the bathrooms had a plumbing leak that led to the discovery of asbestos so the abatement was done but the two bathrooms were never repaired after. It would be approximately 20k to fix those two bathrooms if I had a contractor do it. We could diy and reduce that cost. With all this said could me and her actually qualify to assume the mortgage? If we do should we? And if so would it make sense to take out a heloc to fix the house right away and consolidate debt?
It’s a much bigger house than we need but it’s in a really good neighborhood and when we do have kids we have plenty of room to grow. I think we should do it but there’s just a lot of unknowns and some advice would be nice
Can I/should I assume my parent’s mortgage?
byu/shultzie58 inpersonalfinance
Posted by shultzie58
4 Comments
How much would the mortgage be with taxes & insurance?
>The mortgage payment is about $250 more a month than we pay in rent now
Does that include tax and insurance? You also need to factor in maintenance costs.
I know that interest rate sounds like a huge boon — and extra $80k of equity after repairing the bathrooms isn’t bad either. But you seem to have a history (the truck and personal loan) of biting off more than is financially reasonable.
You’re looking to jump from being truck-poor straight to house-poor. It could work out in the end if you have good luck, but it could also spiral if you have bad luck.
So currently the house has no bathroom?
Another thing to consider is that unless your current place is the same size, your heating costs will go up!
Another concern is that higher education could become more volatile with the changes in loan. We’ve spent more closures and shrinkage in higher education in the last few years than ever before.
How much do property taxes go up each year? Because that can be a big hit.
Why not have your parents hold the note – quit claim you and wife to the house and you just pay it??? Then when you are both all
Situated refinance it???