Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
are you going to use your house line of credit to buy the house 100%?say if the house is $450K,you are borrowing $450k ?
Your son and his fiancee do not have jobs in your city,they will be looking for jobs once they move here ?
Your son is going to sell his house and use the proceeds to update the new house you bought for them?
why cant he use the sales proceeds of his current house to buy the new house ,and get a mortgage from the bank?it sounds like he and his fiancee are financially sound to do so and then update the house with their future earnings?
if the house is in livable condition,what is the big rush?
We are not buying him a house. We are giving them a mortgage so they can buy a house without having to wait to sell their house first. Homes in our community are still selling quickly and for over asking, especially in their price range. An all cash offer with a quick close, which is what he’d be able to offer, goes a long way to getting a home at a reasonable price.
The house he is interested hasn’t been updated in years so we anticipate it needing a lot of work. It likely needs a new roof, air conditioning unit, appliances, flooring and paint. We would have it inspected to determine what is needed. Some of the more cosmetic things could be delayed but the major stuff can’t.
If he can get it at a reasonable price ($320-$350,000) and he puts in $60,000 to $80,000, they will have a home approaching $500,000 in value. Seems like a no-brainer to me and why wouldn’t a parent want their child to do well on this???
I did not pose my question well- I mean are you going to use your house line of credit $$ to help him pay cash for the house?
so if the house is $350,000,you are going to give him $350,000 cash and the cash comes from your house line of credit?
so your personal balance sheet will have 2 new line items,one is an asset -mortgage from your son and one is the liability which is your house line of credit.
and each month he will pay you and you will pay your bank?
is that how it works?
You paid him back for Grad school? That's why he has his own money, you have given him yours essentially.
He has a lifetime to earn money, you are (I'm assuming as you have an adult child) potentially nearing retirement. Fund that, don't enter into what could be a complex situation that could ruin your own retirement.
Quote:
Originally Posted by Lowexpectations
No crap. Paid for undergrad, graduate, helped with the first house, financing the second
Do whatever you want but when is the kid going to stand on their own ?
Im sorry but my wife and I were raised to respect education and to encourage your kids to do their best. We were fortunate to be able to pay for our kids undergraduate degrees between our own money and money from our parents. That has set our kids up for good careers without the burden of student loans. I will not apologize for doing all we could for our kids. Shame on anyone who doesn’t agree.
When this son decided to go to grad school, we told him he’d have to take loans to go. We deliberately did that so he would have a stake in completing it. When he graduated, we paid off his loans because we could, but he was fully ready to pay for it himself.
As I noted, this son has worked and saved his money since he was 16. He didn’t blow that money on frivolous things like many young kids. He didn’t buy a fancy new car or blow it on “toys” like motorcycles, boats, etc. He didn’t go out to bars drinking and drugging every night either. That’s not to say he didn’t have fun. He did, he just made sure he could afford it. That’s why at age 25 he had the down payment for a $250,000 house while fully funding his retirement accounts to their max. Not many kids his age could do that.
The money we gave him for his house was only after he already had the money he needed to buy it. He asked us for nothing. I’d say by any measure that is standing on his own two feet already. I’m certainly very proud of all he has done so far. I’m sorry you don’t agree.
It sounds good to me to help the kids out with this.
But you want to protect yourself and your son.
So buy the house and put it in your name and rent it to them at a reasonable family-discount price of something that at least pays the property taxes and insurance (must have).
Then at some point, let them buy it from you with a bank loan after they have jobs and are settled in.
Be careful you don't cross any IRS gift tax lines.
You want avoid the biggest danger:
Suppose you had put the house in their name, and they get married, and they split up. Now suppose lawyers and some judge decides she should get half of it.
Keep it in your name until they get a bank loan and don't owner finance it.
Quote:
Originally Posted by nirvana07
If i could afford it, it would help the kid with a down payment AFTER he was married.
A loan leads to the expectation that the money will be repaid, and if it is not, it may cause an upheaval in the relationship.
With that being said, you know your kid better than I do.
Edit: Does your area have jobs in your kid's and his fiance's fields?
Our area does have good paying jobs in their fields. They’ve already looked into that.
We would be doing this legally with a full mortgage agreement with both of them secured by the house they buy. That would protect our investment. We won’t be giving them anything. They’d have to pay us back, even if they break up in the future.
I did not pose my question well- I mean are you going to use your house line of credit $$ to help him pay cash for the house?
so if the house is $350,000,you are going to give him $350,000 cash and the cash comes from your house line of credit?
so your personal balance sheet will have 2 new line items,one is an asset -mortgage from your son and one is the liability which is your house line of credit.
and each month he will pay you and you will pay your bank?
is that how it works?
Yes, we would lend him the $350,000 as a mortgage on the house. We would draw up a legal mortgage recorded on the land records so that would protect us should they break up. The money would come from a Home Equity Line of Credit on our house which is fully paid off. They will pay us and we will pay the HELOC.
Financially we are secure. I am retired but have not touched our retirement funds or Social Security yet. We live off income from my wife’s job which she loves and will likely keep doing as long as she can. She has a small pension from a state job that fully pays our medical insurance.
We have a sizable retirement account that, as I said, we haven’t touched yet. We also have a years income as savings invested outside our retirement account. We have no debts so financially we are in good shape.
Actually I have talked with our accountant and he thinks this is a great idea as long as we protect ourselves. It gives our son and his fiancé a nice house near us and helps them make what could be a difficult move easier. It means they will be close to help us as we age and be near our grandkids which they want in a few years. To me it seems more than worth the little risk there is.
Since you’re dead set on doing this, I’ll just repeat my advice that until they are legally married, your son should buy the house in his name only. Once they’re married, if he wants to add her name to the deed, go ahead then.
Since you’re dead set on doing this, I’ll just repeat my advice that until they are legally married, your son should buy the house in his name only. Once they’re married, if he wants to add her name to the deed, go ahead then.
The way he wants it set up,both names will be on the mortgage and both liable whether they are single or divorced or married.
Yes, we would lend him the $350,000 as a mortgage on the house. We would draw up a legal mortgage recorded on the land records so that would protect us should they break up. The money would come from a Home Equity Line of Credit on our house which is fully paid off. They will pay us and we will pay the HELOC.
Financially we are secure. I am retired but have not touched our retirement funds or Social Security yet. We live off income from my wife’s job which she loves and will likely keep doing as long as she can. She has a small pension from a state job that fully pays our medical insurance.
We have a sizable retirement account that, as I said, we haven’t touched yet. We also have a years income as savings invested outside our retirement account. We have no debts so financially we are in good shape.
Actually I have talked with our accountant and he thinks this is a great idea as long as we protect ourselves. It gives our son and his fiancé a nice house near us and helps them make what could be a difficult move easier. It means they will be close to help us as we age and be near our grandkids which they want in a few years. To me it seems more than worth the little risk there is.
Your son sounds exactly like the kind of person you’d have no problems helping because he has proven himself. It’s the same reason I made a similar offer to my daughter. It is an offer I did not make to my son because he is not nearly as responsible and I didn’t want to be in a lender/borrower situation with him.
So often you hear of parents bailing out their adult children and protecting them from their poor choices. I find it refreshing to hear there are a few out there who see the value in rewarding responsible financial behavior.
Hopefully your son and his girlfriend have similar financial goals and skills.
As long as you do it all legally, charge an appropriate interest rate, etc… it’s very low risk. I’d make sure he understands it’s possible he may be required to get his own mortgage if your circumstances change and you need to pay off the HELOC. Since his current house will be sold and this will become his new primary residence that shouldn’t be a problem. You just want to protect your needs and flexibility. I might build that in to the agreement (a balloon payment due after a number of years which you can always modify if it continues to make sense for you to hold the mortgage).
As I said I’ve done a few mortgage loans for different people but never by borrowing myself. That would be my only hesitation in your situation. It would be a shame to have to liquidate your own retirement savings one day to get rid of the HELOC because you can’t predict the future.
Im sorry but my wife and I were raised to respect education and to encourage your kids to do their best. We were fortunate to be able to pay for our kids undergraduate degrees between our own money and money from our parents. That has set our kids up for good careers without the burden of student loans. I will not apologize for doing all we could for our kids. Shame on anyone who doesn’t agree.
When this son decided to go to grad school, we told him he’d have to take loans to go. We deliberately did that so he would have a stake in completing it. When he graduated, we paid off his loans because we could, but he was fully ready to pay for it himself.
As I noted, this son has worked and saved his money since he was 16. He didn’t blow that money on frivolous things like many young kids. He didn’t buy a fancy new car or blow it on “toys” like motorcycles, boats, etc. He didn’t go out to bars drinking and drugging every night either. That’s not to say he didn’t have fun. He did, he just made sure he could afford it. That’s why at age 25 he had the down payment for a $250,000 house while fully funding his retirement accounts to their max. Not many kids his age could do that.
The money we gave him for his house was only after he already had the money he needed to buy it. He asked us for nothing. I’d say by any measure that is standing on his own two feet already. I’m certainly very proud of all he has done so far. I’m sorry you don’t agree.
There’s no need to apologize nor did anyone ask you to feel bad.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
