How much should I have in my EF?

[gamecock43]

I would love to buy the house I grew up in. I used to try and devise a way to become a millionaire just so I could buy it! If I knew then how much I would heart that house now, I would not have advised my mom to sell it. But sadly she sold it just before the boom. The dang thing is worth over $750,000 now. No way I am ever getting that house.
Anyways, this is about Scrimp, I just got to thinking about my old house reading the posts.

[noppenbd]

I'll throw my 2 cents in. Here's what I would do if it were me. Suggest your father discount the house by $24000. You could ignore the realtor fee issue (which could be a bit messy in an audit) and just have him give you and your husband $12K each. Assuming you can save around $40K by the time of the sale that gives you a $236K mortgage which is completely reasonable for $110K a year income. Your PITI would be around $1500, which is only 16% of gross, well within guidelines.

Then to make it equal your dad only has to give out $24K to the remaining 3 couples. This comes out to $72K, which dents your father's nest egg a lot less. You could even argue that since he is avoiding realtor's fees he is not out the whole $24K that he is giving you, but I'm not sure I would go down that route.

Then down the road if he really doesn't need the money, I'm sure he will find a way to get it distributed (either before or after he passes). Then at that time you can pay down the principal if it makes sense.

EDIT: I reread and realized your income won't be $110K until May 2009. But I think you could either wait until then (and pay your dad some rent) or try and qualify just on your income. With $58K income PITI comes out to 31% which is borderline, so you may have to check with some mortgage lenders to see if it will work.

[disneysteve]

I guess I should buy a different house..and only put 5%-10% down...because that is all I will be able to afford.

Another question... Won't your husband be working by then? Won't you actually have a much higher income and, hopefully, greater savings when you count in his contribution?

[ScrimpAndSave]

I would hope so. We weren't planning on buying until January 2010. But by that point, we will have about $40,000 saved...and I wouldn't want to put the entire amount down on a home...we would only be able to afford 5%-10% at that point.

I guess we would have to rent for a year or two after that - which I would hate to do since renting is very expensive here and I wouldn't be able to save very much.

The initial plan WAS to stay, pay rent to my dad, and save up a LOT of money over a few years ($100,000 by spring 2011)....but my dad is talking about getting rid of this house sooner than I thought...and there is no way I can save the same amount of money while paying the crazy rent around here.

[zetta]

If the extra $18,000 (over what your siblings receive) were the only sticking point, one option would be for your father to loan you the money and for you to pay it back at a fair interest rate.

I agree with the other posters who have said your dad may be giving away too much money given his age. Perhaps it would be worth visiting a certifed financial planner to get a professional opinion on the plan.

[MiikeB]

I think you should just go through with it.

Yes there are many ways this could turn out ugly, but only you know how your family is and how they would react to it.

If everyone feels this is fine and you don't think it will end badly just do it, no sense and beating yourself up over it.

[cptacek]

A few things. Right now your father doesn't have a mortgage payment (I think) AND he has you paying him $400 a month rent. Does the future plans include this drop in income for you?

Also, will you be married by the time the gifts are distributed? If not, I think it is really unfair to your other siblings for your dad to give money away to a "legal stranger". And, what if you break up before then? I know, it won't happen to you. Unless it does. Then what?

[gamecock43]

"...unless it does" LOL...that just made me giggle.
I am sure they will create a contract regarding what happens in the event of a breakup. Because in that case...OP cant afford to buy the house anyway. And this might be a good reason to draw up a pre-nup of some sort. You would hate to see the family house go to him or be sold off due to a divorce.

[ScrimpAndSave]

A few things. Right now your father doesn't have a mortgage payment (I think) AND he has you paying him $400 a month rent. Does the future plans include this drop in income for you?

Also, will you be married by the time the gifts are distributed? If not, I think it is really unfair to your other siblings for your dad to give money away to a "legal stranger". And, what if you break up before then? I know, it won't happen to you. Unless it does. Then what?

You are correct. He paid off his mortgage payment back in the mid 1980's. I pay him $400 a month rent (and buy a lot of the food).

By the time the gifts are given, YES I will be married. I wouldn't do that any other way. We will be married Sept. 2009 and then he was thinking of doing the gift thing at the end of December 2009 and January 2010.