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Message
Smart way to help my mom with a loan
Posted on 3/30/23 at 2:03 pm
Posted on 3/30/23 at 2:03 pm
I'm visiting my mom this week and she mentioned in passing how stressed out she is over a loan she owns.
She pays it monthly and can continue to do so, but she said it gives her stress due to the interest rate and at this point in her life, I do not want her to have any stress.
She has a loan for $50,000 that she used to remodel a house she now rents out and it was a floating rate that has gone up to 9%.
For such a small amount, could she put it on a 0% credit card and keep rolling it over or is there any other good ideas to eliminate interest?
I am going to just going to pay it off and give her an interest free loan if there is not a smarter way to re-finance this debt for her. As of now, that is really the only option I can think of.
She pays it monthly and can continue to do so, but she said it gives her stress due to the interest rate and at this point in her life, I do not want her to have any stress.
She has a loan for $50,000 that she used to remodel a house she now rents out and it was a floating rate that has gone up to 9%.
For such a small amount, could she put it on a 0% credit card and keep rolling it over or is there any other good ideas to eliminate interest?
I am going to just going to pay it off and give her an interest free loan if there is not a smarter way to re-finance this debt for her. As of now, that is really the only option I can think of.
10
Posted on 3/30/23 at 2:25 pm to I Love Bama
Sell a couple of BTC and pay it off with no intention of getting it back 
Posted on 3/30/23 at 2:25 pm to I Love Bama
quote:Can she sell the house once the lease is up and pay it off? Or is she upside down?
She has a loan for $50,000 that she used to remodel a house she now rents out and it was a floating rate that has gone up to 9%.
Posted on 3/30/23 at 3:00 pm to I Love Bama
Many if not all of the 0% offers have a 3 to 5% transfer fee . So keep that in mind. But do the math and if the savings are at least decent, it couldn’t hurt to do one with a 12-18 month term. At the end maybe the floating rates will be down or she will have paid it off by then. If not you could pay it off at that point.
Posted on 3/30/23 at 4:04 pm to I Love Bama
If debt bothers me, I pay extra and knock it out as fast as possible. Attack it like she hates it.
I'd guess a fixed rate mortgage option wouldn't save much (7-8%) and wouldn't make financial sense (maybe peace of mind for locking the rate in?).
The best way to get out of debt is to prioritize it and get out of it.
I'd guess a fixed rate mortgage option wouldn't save much (7-8%) and wouldn't make financial sense (maybe peace of mind for locking the rate in?).
The best way to get out of debt is to prioritize it and get out of it.
Posted on 3/30/23 at 5:05 pm to castorinho
quote:
Sell a couple of BTC and pay it off with no intention of getting it back
LOL would never sell BTC. I'll just loan her the cash at 0%.
Thanks.
Posted on 3/30/23 at 5:07 pm to bayoubengals88
quote:
Can she sell the house once the lease is up and pay it off?
Nah she needs to keep the house. Rental income is her retirement.
Just trying to think of a way to get her back to a decent interest rate without me having to get involved.
Posted on 3/30/23 at 5:08 pm to SaintsTiger
quote:
Many if not all of the 0% offers have a 3 to 5% transfer fee
I didn't know that. Dang. Ok. Thanks.
Posted on 3/30/23 at 7:45 pm to I Love Bama
quote:
For such a small amount,
quote:
She has a loan for $50,000 that she used to remodel a house she now rents out and it was a floating rate that has gone up to 9%.
What kind of flex is this?
Posted on 3/30/23 at 8:01 pm to I Love Bama
The 3-5% definitely sucks, but would be less than her current 9%.
Use the cash advance now in the $50k. At 3% it bumps to $52.5k. If she can float $1k a month, then after 18 months you’re at $34.5k. Another 3% to $36k…
So in 3 years, she’d be looking at about $5k in interest rates.
At the 9% rate she’d be looking at $12k in interest and it would take around 5 years
Use the cash advance now in the $50k. At 3% it bumps to $52.5k. If she can float $1k a month, then after 18 months you’re at $34.5k. Another 3% to $36k…
So in 3 years, she’d be looking at about $5k in interest rates.
At the 9% rate she’d be looking at $12k in interest and it would take around 5 years
Posted on 3/30/23 at 8:07 pm to I Love Bama
quote:
Just trying to think of a way to get her back to a decent interest rate without me having to get involved.
Good on you for helping your momma but you will be involved.
Posted on 3/30/23 at 8:35 pm to Weekend Warrior79
Did you use an online calculator to figure this out? Can you share the link?
Posted on 3/30/23 at 9:52 pm to I Love Bama
quote:If sold, CD interest + social security would t be enough?
Nah she needs to keep the house. Rental income is her retirement.
There’s no way she’s living on income from one rental property (1,500/month?)
And if she has multiple rental properties, I can’t envision a scenario where she needs the income from this particular rental to stay afloat.
Notice, I’m not calling you a liar.
Posted on 3/30/23 at 10:56 pm to I Love Bama
quote:
just going to pay it off and give her an interest free loan
You’ll need to file a gift tax return if you issue a below market rate loan.
If you charge a still relatively low rate (check AFRs) then it wouldn’t be considered a gift but you would count the interest portion as income.
Posted on 3/30/23 at 11:15 pm to I Love Bama
If you are eligible for a Navy Federal card, they don’t have a balance transfer fee. LINK
Posted on 3/30/23 at 11:38 pm to I Love Bama
Why can’t she do a cash out refinance? Guy on here a couple days ago got a 6% 5 year ARM? Or a Heloc but I have no idea on the rates?
You are leaving some details out and it’s hard to give you accurate information without all of the details.
As said you can do a personal AFR loan (minimum interest rate the IRS allows) which is 3.6% right now.
You are leaving some details out and it’s hard to give you accurate information without all of the details.
As said you can do a personal AFR loan (minimum interest rate the IRS allows) which is 3.6% right now.
Posted on 3/31/23 at 5:02 am to Lightning
quote:
If you are eligible for a Navy Federal card, they don’t have a balance transfer fee. LINK
They aren't 0% interest on balance transfers either, though.
The cost would roughly be about the same, I'm sure.
Posted on 3/31/23 at 7:57 am to I Love Bama
$50,000 is not a large amount. Just pay it off for her. She’s your mother.
If you have her pay you back, just do $16,000 a year and it’s a gift with no tax implications.
If you have her pay you back, just do $16,000 a year and it’s a gift with no tax implications.
Posted on 3/31/23 at 9:10 am to Drizzt
not 100% sure but you can gift more than $16k a year without tax implication. Lifetime Gift Tax Limits
Most taxpayers won't ever pay gift tax because the IRS allows you to gift up to $12.92 million (as of 2023) over your lifetime without having to pay gift tax.
Most taxpayers won't ever pay gift tax because the IRS allows you to gift up to $12.92 million (as of 2023) over your lifetime without having to pay gift tax.
Posted on 3/31/23 at 10:02 am to ks_nola
You have to file paperwork with the IRS if you gift more than 16k in a year. I prefer having no paper trail with IRS whenever possible. Not rocket science.
I bought my mom a house three years ago. Put $50,000 down. I’m not having her pay me rent but we do $16k a year to me and my sister mainly to get assets out of her name.
I bought my mom a house three years ago. Put $50,000 down. I’m not having her pay me rent but we do $16k a year to me and my sister mainly to get assets out of her name.
This post was edited on 3/31/23 at 10:07 am
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