[quote=bearishgurl][quote=eavesdropper] eavesdropper, maybe you can run the comps in the “depressed rural area” that your stepdaughter is wanting to make an offer on and present it to her, showing that $225K (or thereabouts) is too much $$ to offer, emphasizing all the work that needs to be done to the property to make it livable. Try to see if you can talk to her about what it’s like to feel trapped due to being overmortgaged and how that will take away her future choices in life when/if her credit is affected in the future . . . anything to get her and the boyfriend to rethink purchasing right now.
Based on your post, I agree that this couple is too financially unstable to deal with the commitment of a mortgage right now. An unexpected pregnancy could completely blow them out of the water and cause them to go on public assistance.[/quote]
Believe me, BG, I’ve done all that, and more. I’ve actually created scenarios where I tell them to think about how happy and excited they are now, and then to think about a possible situation a couple years down the road where only one of them is employed, and they’re not able to make the payments. Or their furnace goes bust (in February), and they don’t have $5,000 to replace it. I’ve asked them to think how they’re going to feel when the bank sends them those letters, and then the sheriff comes to get them out of the house. I’m not trying to be cruel; I think that it would be heartless to let them go into this without them knowing that this is a very real possibility. They’ve already asked my husband for assistance with the down payment. Because I had already proposed to him (without their knowledge) that we give them a very small amount toward d.p., I agreed, but warned him that we had to sit down with them, and make it clear that we would not be able to contribute further, or make “loans” when stuff went wrong.
She’s been complaining about all the long hours she’s putting into work, trying to build up the cash she needs for closing. I’ve told her that she can’t stop once they’re in the house; they have to continue working at that level until they have at least $20K or $25K ready cash in the bank. I’ve told her that the house will be a veritable millstone around their necks if she gets a lucrative job offer in another city, or if they suddenly decide they want to live in another state while they’re still young and childless. At one point (with another property they wanted to bid on) the b.f. asked me how much money were they going to make on the house (i.e., how much would the value rise) over the next 3 years; I was particularly distressed by this one because not only did it show that he didn’t have a clue as to what was happening in the real world, but also that he hadn’t been listening to a word that any of us had been saying. Of course I took the opportunity to tell them that if they decided they wanted to sell two years down the road, they risked the house being worth $50K or $60K of dollars less than what they bought it for, and, further, point out that, even once values start to pick up in this area again, they are probably never going to rise at even close to the rate they did in the aughts.
Believe me, we’ve tried to school them. But what I hear from them, and others in their peer group, is “We’re tired of throwing away money on rent. We want our money to grow.” I then ask them how they will feel if they pay a down payment and a mortgage for 3 years, and then the bank takes the house away (leaving a big black mark on their credit reports) because one of them lost their job for a few months. They cite the low interest rates, and we point out that we bought houses back in the 80s at mortgage rates twice or 3x what they are today, and they can do it too. Nothing sinks in.
So BG, we’ll support them as much as we can, emotionally, and with free labor. I sincerely hope that I’m wrong, and that this turns out really well for them. And, in truth, rentals are becoming more and more scarce in these parts, and rents are in the stratosphere in many areas, so if they can make it through the next few years and get some money saved up, it might work out.
