Loan from firm? Forum

[Anonymous User]

I'm a 2nd year at a boutique firm in Texas, where the housing market is insanely competitive. Married. I feel like I'm throwing money away at rent and would obviously prefer to buy. While my income is good, it is really difficult to come up with the kind of money needed for a down payment.

Do law firms ever provide loans to associates for things like this?

[emkay625]

If you're at a boutique in Texas, you're most likely making 160, 170 or 175 now that you're a 2nd year (and more if you're at Susman). At that salary + Texas COL, you should be able to save for a down payment in a year—and that's even if you have outrageous loans. I recognize that this doesn't answer your question, but with all due respect, what on earth are you spending your money on?

Edited to add: this is not a sarcastic, but a sincere question. I will be working for a boutique in Texas next year and am also married and am now wondering if the budget we made is just for some reason not feasible.

[Anonymous User]

No. Firms do not loan money to associates, that's what banks are for. Maybe they would give you a loan if you are a partner, but there is no way they would take the risk on an associate, ever.

You can't qualify for a good loan based on your income? Yeah if you have a ton of loan payments that is one thing, but seriously home prices in Texas aren't that expensive unless you are looking to live really close to downtown in Austin/Dallas/Houston. Also, rent money isn't wasted money, look up the NY Times rent vs buy calculator to help orient your thinking. Besides if you are making 150k+, how can you not save a few thousand a month towards a down payment? You'll be able to afford a really nice place in 1.5-2 years.

Edit: Take math, save $2500 a month between your wife and your income, after 2 years that is $60k for a downpayment with probably an income of 160-70k+ (if good boutique). You'll easily be able to afford a home in any Texas market

[Anonymous User]

Ha thanks, but I'm not at a major boutique. I'm in a very specialized area that doesn't lend itself to paying as much as those firms. Looking at closer to 100K as a second year. With that said, I am spending my money on: kids, insurance for family, rent that is too damn high, loans, other debt, car, etc. Nothing out of the ordinary, but all that adds up. Plus, my spouse stays at home.

[Anonymous User]

Thanks anon, op here.

1.5 to 2 years is easily doable. I was just posing a hypothetical in my mid-morning daydream about the perfect home. It was a thought that crossed my mind, though I don't think I could ever ask the firm anyway.

I appreciate all the concerns for my spending habits.

[emkay625]

Ha thanks, but I'm not at a major boutique. I'm in a very specialized area that doesn't lend itself to paying as much as those firms. Looking at closer to 100K as a second year. With that said, I am spending my money on: kids, insurance for family, rent that is too damn high, loans, other debt, car, etc. Nothing out of the ordinary, but all that adds up. Plus, my spouse stays at home.

Ahhhhh I did not think about kids. That makes more sense. Sorry for snarkiness.

It wouldn't get you all the way there, but if you have any money in an IRA, tax laws will let you deduct up to 10K from it if you're a first-time home buyer while still maintaining its tax-free status.

[Anonymous User]

Wow, I did not know that. Excellent advice.

[emkay625]

Wow, I did not know that. Excellent advice.

You might want to check with someone (I am not a tax attorney!) but my brother did it three or four years ago. No idea if the law has changed.

[BeenDidThat]

As noted above, law firms aren't banks. And a boutique is even less of a bank.

That said, some (bigger) firms have close relationships with a few lenders. They might have ways to get you set up with them, and the lender might be more willing to extend credit if your firm's associates have traditionally been a good risk. Wouldn't hurt to ask if your firm has a relationship like this, though I suspect you'd have heard about it already.

[Tiago Splitter]

Ha thanks, but I'm not at a major boutique. I'm in a very specialized area that doesn't lend itself to paying as much as those firms. Looking at closer to 100K as a second year. With that said, I am spending my money on: kids, insurance for family, rent that is too damn high, loans, other debt, car, etc. Nothing out of the ordinary, but all that adds up. Plus, my spouse stays at home.

Ahhhhh I did not think about kids. That makes more sense. Sorry for snarkiness.

It wouldn't get you all the way there, but if you have any money in an IRA, tax laws will let you deduct up to 10K from it if you're a first-time home buyer while still maintaining its tax-free status.

It's penalty-free, but you still have to pay taxes on the distribution if you'd otherwise owe them.

[kartelite]

Ha thanks, but I'm not at a major boutique. I'm in a very specialized area that doesn't lend itself to paying as much as those firms. Looking at closer to 100K as a second year. With that said, I am spending my money on: kids, insurance for family, rent that is too damn high, loans, other debt, car, etc. Nothing out of the ordinary, but all that adds up. Plus, my spouse stays at home.

Ahhhhh I did not think about kids. That makes more sense. Sorry for snarkiness.

It wouldn't get you all the way there, but if you have any money in an IRA, tax laws will let you deduct up to 10K from it if you're a first-time home buyer while still maintaining its tax-free status.

You have to pay taxes if you deduct early, even for a home purchase. If you have a 401k (if you don't, you could do IRA -> 401k rollover), you can also borrow against that.

[UnfrozenCaveman]

I think you can borrow earnings from a Roth 401k without a penalty...might want to look into that if you've invested in one for a while.

But yeah, talk to someone at the firm about which banks they work closely with for their cash needs. Those banks may be more willing to work with ya.

[Devlin]

Ha thanks, but I'm not at a major boutique. I'm in a very specialized area that doesn't lend itself to paying as much as those firms. Looking at closer to 100K as a second year. With that said, I am spending my money on: kids, insurance for family, rent that is too damn high, loans, other debt, car, etc. Nothing out of the ordinary, but all that adds up. Plus, my spouse stays at home.

Move to Sugar Land, Katy, Plano, Frisco or Round Rock if you want to purchase a home. You are in a fine position to buy a house. Don't ask your firm for a loan, they will look at you sideways.