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"I do not finance (mortgage) so it would be easier to do this at a lower price"????????
You are buying a valuable asset from vulnerable elderly people at below market value. You don't want to give them market value because "I do not finance".
Honestly, this does NOT sound like you doing them a good deed. This sounds like you conning them out of the equity in their home. DON'T DO IT!
There are many other ways of them staying in their own home, that are legal, ethical, and don't involve you getting the equity in their home by means of a supposed "good deed".
And just so you know, if either of them needs to go into a nursing home in the next 5 years after you 'buy' the house from them for just what's owed on the mortgage, the government will come after you for the equity in the house, that you took from them, and they'll take it from you to pay for their nursing home care.
So, really, stop yourself from taking the equity in an elderly couple's home, by means of a 'good deed'.
Yes, they would. The government does a look back of five years, to see if people had assets that they transferred so as to be able to qualify for Medicaid. If the elderly couple had been foolish or demented enough to have transferred the house to him for only what was owed on it, and the house had equity in it that the man received as a "gift", since obviously he didn't pay them market rate, the government will go after HIM for that asset that he received from the elderly couple.
This was instituted because so many people were transferring their elderly parents' assets to themselves, so that Medicaid would pay for the parents' nursing home care.
Nothing personal, but you are not middle aged, so that leaves.....
I'm 52 and don't consider that middle aged either as I doubt I'll live to 104.
As to the original question: doesn't seem like it would be in the best interest of your friend's to do this.
I do think there are IRS issues if there is a lot of equity involved, it may be considered a gift in part.
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I want to see some numbers. How much is left on the mortgage and what is the house worth today?
Yeah, there is all kinds of stuff the OP didn't share. At this point, to me, the owner's absolutely shouldn't do this.
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