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If you do loan your parents money to purchase the house, you should have your loan recorded just as if the money came from a bank. That way it's not really a personal loan. I think what you propose is an excellent idea as most banks prefer a cash sale to a loan and you'll have a better chance of buying at the right price.
The way lenders are looking at property these days, your parents might find themselves a long way down the road when the lender decides to not fund it for some reason.
Thanks for the reply! I think the loan idea is a good one and I'll put it on my list of things to discuss with my parents. What's the process of having the loan recorded? Could the same RE lawyer who handles the closing help us with setting that up?
I'm sure that's exactly how it works in your neck of the woods.
Are you being snarky? I can't tell.
Anyway, I'll definitely talk it over with my parents. I talked to my mom today and she is now saying that "it's so complicated it hardly seems worth it" (??) so maybe the entire issue is moot.
I talked to my mom today and she is now saying that "it's so complicated it hardly seems worth it" (??) so maybe the entire issue is moot.
I've read about how hard it is to find a loan for under $80,000 - and if they can't get a loan, then their only option would be to ask you - and that realization might very well weigh heavy on your Mom.
I would ask her if she's giving up because she doesn't want the house - or if it's because she's afraid of burdening you. It will help you to make your decision, to know how she's really feeling.
I've read about how hard it is to find a loan for under $80,000 - and if they can't get a loan, then their only option would be to ask you - and that realization might very well weigh heavy on your Mom.
I would ask her if she's giving up because she doesn't want the house - or if it's because she's afraid of burdening you. It will help you to make your decision, to know how she's really feeling.
Thanks for the advice. Yes, for sure, I'll talk to her about it. I don't think she's researched very much, and therefore she's not really aware of all her options, either. I want to help her by telling her what I've learned, but I need to present it properly because she tends to be defeatist and sometimes she can be very dismissive of others' opinions. She was ready to give up on the whole idea today even though they only contacted the agent a week ago and did the walk through of the house a few days ago. I told her to think about it for a couple more days so I know how to proceed. Maybe I'm more afraid of giving her the $$ and then her deciding she hates the house than anything else! I need to get my head on straight, LOL.
My philosophy is if you loan money to family and friends, be comfortable with the thought you may never get it back.
Yes, this. The fact that you feel "uncomfortable with the idea of [your] money floating out there" means DO NOT DO IT. Will you mind if you never get repaid? Will you ever need the money?
Or another thought- would you consider co-buying the home with them, you own 70% ($35k) and they own 30% ($15k)? You'll need to come up with a WRITTEN AGREEMENT on what do do if one party wants to sell (ie, the other party has the option to buy them out at current market value, etc). You can ammend the ownership %'s in writing as they pay down their loan to you.
Another thing to consider is what happens if your mom dies first. Are you comfortable with your step-father living there and maybe falling behind on the payments/ I would hope this would be a long way in the future, but you have to plan for everything. When I carried the loan on a previous house (not related to buyers), my lawyer drew up the contract, made out an amortization schedule (I had to send them a letter for the IRS every year stating the interest they had paid), specified that they had to carry homeowners insurance for the amount of the house with me as beneficiary,
and recorded it.
I'm a hardnose when it comes to certain things, but responsible family is where I will go out of my way to help. Protect yourself and your investment, be a recorded lien on the property. Actually, talk to an accountant for the different tax implications, co-owner vs. mortgagee. After reading the love inbetween your lines, you'll regret it if you don't do it.
I think the deal has to be legally understood/locked by all. Just understandings/beliefs would not work for me.
I have seen to many family splits/schisms happen when the best of intentions went awry.
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Yes, for sure, I'll talk to her about it. I don't think she's researched very much, and therefore she's not really aware of all her options, either. I want to help her by telling her what I've learned, but I need to present it properly because she tends to be defeatist and sometimes she can be very dismissive of others' opinions. She was ready to give up on the whole idea today even though they only contacted the agent a week ago and did the walk through of the house a few days ago. I told her to think about it for a couple more days so I know how to proceed. Maybe I'm more afraid of giving her the $$ and then her deciding she hates the house than anything else! I need to get my head on straight, LOL.
