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Any positives/pitfalls of taking home loan from family?
Posted on 8/18/13 at 9:29 am
Posted on 8/18/13 at 9:29 am
Instead of getting a mortgage through a bank, I have been offered the possibility of a family member paying cash for a house, and then u would set up the mortgage with said family member. Interest rate will be standard daily rate, no down payment. Any tax implications (I believe you can still deduct interest but not principal)? Any other positives or pitfalls the money board can think about?
6
Posted on 8/18/13 at 9:32 am to The Hamburglar
Don't mix family and money
Posted on 8/18/13 at 9:35 am to Tigerpaw123
I generally agree with you, but this situation is actually unique. This side of the family is very small so what is there's will ultimately be ours, so it is our eat interest too to make a good business decision for all involved. I'm more concerned about any tax implications that I don't know about
Posted on 8/18/13 at 9:40 am to The Hamburglar
I'm not sure if you can deduct the interest. I'm interested in this too
Posted on 8/18/13 at 9:42 am to The Hamburglar
All situations are unique
Way too many things can go wrong, especially over the course of a 15-30 year mortgage (divorce, death, disability, loss of job, decrease in value of house bc of fire, flood, etc plus a million other things that could go wrong)
But to answer your question a home loan is a home loan regardless if it is with citi or mom n dad, you get the interest deduction, they claim the interest income
Way too many things can go wrong, especially over the course of a 15-30 year mortgage (divorce, death, disability, loss of job, decrease in value of house bc of fire, flood, etc plus a million other things that could go wrong)
But to answer your question a home loan is a home loan regardless if it is with citi or mom n dad, you get the interest deduction, they claim the interest income
Posted on 8/18/13 at 10:31 am to The Hamburglar
it won't show up on your credit report which could hurt you
Posted on 8/18/13 at 10:54 am to The Hamburglar
I would speak to a tax attorney regarding the interest deduction.
As far as loan, I know a couple people who have done this, where the parents are the bank and they get a % return on their money, and when they kick the bucket the debt is absolved.
Just have everything notarized so at no point there is any gray area regarding the terms
As far as loan, I know a couple people who have done this, where the parents are the bank and they get a % return on their money, and when they kick the bucket the debt is absolved.
Just have everything notarized so at no point there is any gray area regarding the terms
Posted on 8/18/13 at 11:01 am to Tigerpaw123
quote:Generally I agree.
Don't mix family and money
Tax ramifications might be worth looking at too.
Posted on 8/18/13 at 12:44 pm to Tigerpaw123
quote:
Don't mix family and money
Generally a good idea.
But if you do it anyway, be sure you do it formally with contracts and everything. That way nobody can say later "But I thought it worked *this* way, not that way!"
Posted on 8/18/13 at 3:00 pm to The Hamburglar
low closing costs
no credit score help though, although I think it could be reported if you figure out how to do it.
Tax implications are no different at all.
Think of it like a retirement fund for yourself if you stand to inherit down the road.
Keeps all of the money in the family.
safe secured investment for them, better than the markets
I think it is a great idea.
I've done it twice.
no credit score help though, although I think it could be reported if you figure out how to do it.
Tax implications are no different at all.
Think of it like a retirement fund for yourself if you stand to inherit down the road.
Keeps all of the money in the family.
safe secured investment for them, better than the markets
I think it is a great idea.
I've done it twice.
This post was edited on 8/18/13 at 3:01 pm
Posted on 8/18/13 at 3:22 pm to The Hamburglar
There probably won't be any major problems as long as you can make your payments on time.....
Posted on 8/18/13 at 9:16 pm to The Hamburglar
quote:
Don't mix family and money
THIS!
--------------------------------------------------------------------------------
Posted on 8/18/13 at 9:30 pm to lsu1980
quote:
THIS!
I've done it, and never had a problem.
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