Too much debt to take on?

Submitted by Informal_Quit4830 t3_1277766 in personalfinance

Having trouble making sense of my finances and need some help.

Bought a home with an individual, and now we wish to part ways. I offered to buy their portion of the home.

New Loan would be 5.75% with a monthly payment of $3,150. With electric, gas, water this goes up to roughly $3,350/month

I will likely owe $20K to this individual for their portion of the home. I don’t have this available at the moment, but was planning on taking out a personal loan after the refinancing has been completed. I also wanted to take out a loan so as to not drain my savings+stock investments.

I make $85K/year, and am expecting a raise this month to roughly $100K/year. If I take out the loan like I’m thinking, I’ll have a huge monthly bill with all the debt.I’ll likely be bringing in ~$6K/month.

The thing is, the home is in a fantastic location. Prices are going up fast and it’s just a hot part of town in general. I’m quite comfortable in my career path and am confident I’ll progress upwards at a good rate.

Am I being dumb by considering this? We could sell the house and I could transition into renting, but I feel that would be a waste of an opportunity? We’ve only had the home for one year.

Thoughts?

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Comments

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tactical808 t1_jecyr2z wrote

Separate the emotional aspect of the home from the financial aspect. It’s nice to own a home, but it’s not a need.

Based on your numbers above, your mortgage and some utility costs will be more than 50% of your take home budget. You also don’t account for property tax, insurance, and maintenance. It seems a bit too tight. But, everyone is different. You could also rent a room to help out on the mortgage.

Build your overall budget, write down your goals (retirement, travel, etc.) and see how those goals fit in with what’s left.

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Bad_DNA t1_jed1jes wrote

What’s the rate of the current loan?

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MasinMadasHell t1_jed9gok wrote

Only if you get a roommate. More than half of your income will be the payment + you'll have a new loan payment? That doesn't leave you with much cushion and opens you up for risk (what happens if you need a major repair done in six months?)

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summer-lovers t1_jef2qnn wrote

This is probably not a good idea. Have you sat down and set up a budget?

Assuming you have a better rate now, Can you remove your partner's name from the document without refinancing to that higher rate?

I think this would be unwise. Even with a roommate, that is not a stable arrangement for your future.

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