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I know the OP just asked for opinions. But I noticed s/he isn't exactly coming back to have a conversation about this.
I wanted to know if there was a downside I hadn't thought of. Most advice seems to be "don't do financial transactions with family members". I appreciate all the responses.
Never give your children access to your assets. If your son holds your mortgage, doesn't he also own your house? That's only $1700 more than he would make in a savings account over 4 years. And aren't there legal fees involved? Let him earn the $400 a year in some other way.
In what way does someone who holds a mortgage own a house? The bank doesn’t own my house, I do. They have zero legal claim to the house unless I didn’t make my payments and even then they don’t own the house, the house would just be forced for sale with the vast majority of the money going to me and a small portion to them.
They have zero legal claim to the house unless I didn’t make my payments and even then they don’t own the house, the house would just be forced for sale with the vast majority of the money going to me and a small portion to them.
Well, not quite. How much you'd realize from the sale will depend on your loan balance. Everyone knows that early in a mortgage most of what you pay is interest, not principal. The earlier in the mortgage period you sell, the higher the percentage of the proceeds that will go to the lender not you!
Last edited by Parnassia; 05-27-2020 at 10:36 AM..
So our son has offered on a couple of occasions to hold our mortgage. Principal balance today is about $53,000 interest rate is 3.65% and total payment is $1,150.00/month which includes a little extra principal payment to make it a round number. We have about 50 payments to go, which would total around $57,500.
Our son figures on clearing $4,500 in profit by the time 4 years, 2 months goes by.
We don't need the interest deduction since we're taking the standard deduction on our 1040 form now.
What is the downside (for us) of having our son hold the mortgage? He is 25 and lives with us, paying rent/board.
Don't mix business with family. Don't do a loan held by your son.
So your son will front you the cast to pay off the bank in order to make a profit off you? . . . Something is not adding up.
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