Morning y’all. Today’s dilemma: not really whether to borrow from family, but how much to borrow.
It’s a hypothetical because it would only happen if some up in the air job stuff happens and I have a good reason to buy a house approximately a year from now. I am definitely going to have a job after this contract ends, which is the good news; the question is where will this job be located, and a house may or may not be plausible depending. But let’s assume for the sake of argument that I am in fact going to be in a small city where I could buy a very nice house in the $90-110,000 range. It could be a bit less, but again, let’s go with the middle figure there, and assume I want a $20K down payment.
My current saving schedule would have me at only about $3000 in the down payment fund (as opposed to my various other savings funds for repairs, emergencies, travel, etc) by then. Uh….
1) Raid the emergency etc funds. Not only do I think this is a bad idea in and of itself, but it also would probably only get me up into the $10000 range, which still isn’t $20K.
2) Borrow $17K from my parents. Given the salary I’d be at, I could plausibly pay this off, while paying minimums on the mortgage itself, within a couple of years at the most, possibly faster if I had a renter share the house. I could very easily get it back to them before they’d need it themselves for the later part of their retirement. (We have a very good relationship, their own mortgage is paid off, and while I definitely would not take $17K from them as a gift, they could probably afford to do that, even. But I’d rather they have it back and spend it on themselves, at some point if not now.)
3) Stop contributing to retirement (which, to recap, I do at the rate of $1000 a month) either immediately, or beginning later in the fall, and bank that money instead. Depending on when I started and when I actually bought the house, I could have my own down payment savings account at about $13-15K, meaning that I’d only borrow about $5-7K from my parents, which I could repay in say six months in addition to the mortgage itself.
I’m leaning towards Option 3. I could stop contributing in September — by then my retirement accounts should be over $20K. I’d have about 7 or 8 months to save all the cash I possibly could, and if I did end up not buying after all, I would put that cash (1) an IRA til I maxed out and (2) a taxable investment account. And of course I’d restart my contributions as soon as I either bought, or decided not to buy.
However, maybe I’m wrong about this. I’m old, after all, and maybe house or no house, it’s just not a good idea to stop retirement contributions for any reason right now when I’ve only even had an account for a year. I’m really seeking thoughts on these scenarios — what am I not thinking about?