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My mother passed away and left me with 100,000 dollars.
My boyfriend and I decided that we would go ahead and buy a house. We are living with my dad right now and have 2 kids and we are both 22.

I am going to school for dental hygiene and he has a good job. I have no idea about buying a house and was wondering how much money I should put on the house?

I am looking at a house now that is 125000 and was just wondering how much down payment I should put on the house and how much I should keep for emergency money.

I will be done with school in 4 years since I just started college.

I was also wondering if you put more money down will it make your mortgage less? Let's say the house is 125000 and you put 60000 on it would that make the mortgage less?I live in the United States.

  • Please edit the tags and add country. – Dheer Jun 29 '15 at 3:15
  • What should I edit the tags to?This is my first time on this site. – Stephanie M Jun 29 '15 at 3:38
  • Add the country tag, for example united-states, united-kingdom etc – Dheer Jun 29 '15 at 3:51
  • Edited tags a bit. Feel free to change 'em back. – keshlam Jun 29 '15 at 4:32
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    You do understand that you will have to make monthly payments on your mortgage, and that no bank will be willing to lend you any money if they cannot be re-assured that you, as the sole borrower, have sufficient income to be able to make the monthly mortgage payments? Indeed, unless you have a job that pays you about one-third to one-fourth of the proposed amount to be borrowed, you will likely not be approved for a mortgage at all. – Dilip Sarwate Jun 29 '15 at 12:51
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Before doing anything else: you want a lawyer involved right from the beginning, to make sure that something reasonable happens with the house if one of you dies or leaves. Seriously, you'll both be safer and happier if it's all explicit.

How much you should put on the house is not the right question. Houses don't sell instantly, and while you can access some of their stored value by borrowing against them that too can take some time to arrange. You need to have enough operating capital for normal finances, plus an emergency reserve to cover unexpectedly being out of work or sudden medical expenses. There are suggestions for how much that should be in answers to other questions.

After that, the question is whether you should really be buying a house at all. It isn't always a better option than renting and (again as discussed in answers to other questions) there are ongoing costs in time and upkeep and taxes and insurance. If you're just thinking about the financials, it may be better to continue to rent and to invest the savings in the market. The time to buy a house is when you have the money and a reliable income, plan not to move for at least five years, really want the advantages of more elbow room and the freedom to alter the place to suit your needs (which will absorb more money)...

As far as how much to put down vs. finance: you really want a down payment of at least 20%. Anything less than that, and the bank will insist you pay for mortgage insurance, which is a significant expense. Whether you want to pay more than that out of your savings depends on how low an interest rate you can get (this is a good time in that regard) versus how much return you are getting on your investments, combined with how long you want the mortgage to run and how large a mortgage payment you're comfortable committing to. If you've got a good investment plan in progress and can get a mortgage which charges a lower interest rate than your investments can reasonably be expected to pay you, putting less down and taking a larger mortgage is one of the safer forms of leveraged investing... IF you're comfortable with that. If the larger mortgage hanging over you is going to make you uncomfortable, this might not be a good answer for you. It's a judgement call.

I waited until i'd been in out of school about 25 years before I was ready to buy a house. Since i'd been careful with my money over that time, I had enough in investments that I could have bought the house for cash. Or I could have gone the other way and financed 80% of it for maximum leverage. I decided that what I was comfortable with was financing 50%. You'll have to work thru the numbers and decide what you are comfortable with.

But I say again, if buying shared property you need a lawyer involved. It may be absolutely the right thing to do ... but you want to make sure everything is fully spelled out... and you'll also want appropriate terms written into your wills.

(Being married would carry some automatic assumptions about joint ownership and survivor rights... but even then it's safer to make it all explicit.)

Edit: Yes, making a larger down payment may let you negotiate a lower interest rate on the loan. You'll have to find out what each bank is willing to offer you, or work with a mortgage broker who can explore those options for you.

  • Well my mom left me the 100,000 so my name would be on the house he would just be helping me with the bills until I finish school then we would both pay on the house.I have just started college to become a dental hygienist and he has a job making good money.I was thinking I could put 20% down on the house which on a 125000 house would be about 25000 I would pay that take some out for furniture for the house and save the rest for emergency money.So I would have about 60000 for emergency if I did it that way.Would my next step to be to get with a lender?I need to get my credit up a little bit. – Stephanie M Jun 29 '15 at 3:53
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    If you're both paying on the house, he may have some legitimate claim on part of its value, and there are multiple possible ways of calculating that. Nail it down explicitly. We hope it will never become an issue, but you can't afford to be unprepared. – keshlam Jun 29 '15 at 4:13
  • I just thought since we aren't married and that my name will be on the house that it wouldn't be an issue. – Stephanie M Jun 29 '15 at 4:19
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    PMI isn't always that significant. We put about ~13% down on a ~$235,000 condo a couple years ago; our PMI was only an extra $25 a month (until we had paid up to 20%, at which point it automatically stops). That's not nothing, but it's not crazy, either. (Average PMI was like 3x more, but our local credit union was awesome.) – neminem Jun 29 '15 at 16:17
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    With no income, you'll have a tough time getting a bank to give you a loan. – JoeTaxpayer Jun 29 '15 at 16:44
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I Usually would not say this but if you can just put down 20% I would do that and get a 15 year mortgage. The rates are so low on 15 year mortgage that you should be able to make more than the 3% in the market per year and make some money. I wouldn't be surprised if for 1/2 of the term of your loan you will be able to make that just in interest. Basically I have done this for my house and my rental properties. So I have put my money where my mouth is on this. I have made over 9% each of the last three years which has made me $12,000 dollars above and beyond over what I would have paid in interest per year. So it a decision that net me $36,000 for doing nothing. Now the market is going to be down some of those years so lets see how it works out but I have history on my side. Its not about timing the market its about time in the market. And 15 years in the market is a pretty safe bet albeit not as safe as just dumping you money in the mortgage.

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    She has no income. How much mortgage do you think the bank will give her? (Otherwise, I agree with a low downpayment, and would even suggest a 30 year mortgage.) – JoeTaxpayer Jun 29 '15 at 16:46
  • Right! I missed that. – Mark Monforti Jun 29 '15 at 17:05
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    Though he does have a good job. I was able to get 155k mortgage when I was making 50k back in 1998 and my girl friend now wife was making 21k. He will have to be on the mortgage. That's for sure. – Mark Monforti Jun 29 '15 at 17:13
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    I have some income that will come in for going to school I just started so I haven't got any yet.What I was going to do since he is the one with the most income I was going to use my emergency money towards the payments every month to help him out.I calculated it and if I give him 200 a month for 4 years until I finish school for some on the bills then that would be 9,600 over 4 years and I would still have money left.So the money that is left after I finish school will go towards payment for the house.What would the first step be talking to a lender? – Stephanie M Jun 29 '15 at 17:48
  • I am looking for a house 125000 and below I do not what anything higher then that. – Stephanie M Jun 29 '15 at 17:48

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