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Purchasing a home from parent/family
Posted on 9/24/20 at 2:11 pm
Posted on 9/24/20 at 2:11 pm
Are there options outside of traditional home loans that I could take advantage of? I want to avoid unnecessary fees and interest.
I could be way off here but assuming the family member is in no rush to “cash out” could we sign the house into my name then agree to monthly payments for an agreed upon price? Sign a promissory note or something. That way there no interest? Basically lease to own?
Then, if they would like a lump sum payment I could take a loan out against the house( which I own the deed to) and pay off a chunk of the debt with that loan; with limited interest rates?
Obviously if they want/need the cash we would have to figure something else out.
I’m ignorant to all of this so please excuse me if this is a dumb solution Would like to avoid banks and realtors.
I could be way off here but assuming the family member is in no rush to “cash out” could we sign the house into my name then agree to monthly payments for an agreed upon price? Sign a promissory note or something. That way there no interest? Basically lease to own?
Then, if they would like a lump sum payment I could take a loan out against the house( which I own the deed to) and pay off a chunk of the debt with that loan; with limited interest rates?
Obviously if they want/need the cash we would have to figure something else out.
I’m ignorant to all of this so please excuse me if this is a dumb solution Would like to avoid banks and realtors.
Posted on 9/24/20 at 2:17 pm to MLSter
its called owner financing.
as long as the owner agrees to the terms you can do whatever you want.
you'll still have to have a closing
as long as the owner agrees to the terms you can do whatever you want.
you'll still have to have a closing
Posted on 9/24/20 at 3:39 pm to MLSter
Private annuity/ installment sale
Posted on 9/24/20 at 4:59 pm to cgrand
quote:
ts called owner financing.
This, but don't do it OP. Horrible idea, especially for a house. If something goes wrong with one of your finances it will end extremely poorly.
Normally Owner Financing works out much better for the Owner then the buyer, but that's because the risk is high and the buyer usually doesn't have other options.
Unless you are buying it from someone with a lot of money that has little chance of needing this money I would highly recommend a 3rd party lender so one of you is free and clear.
Posted on 9/24/20 at 5:12 pm to baldona
family is different, though.
my parents are owner-financing their house to one of my cousins. my parents don't need the cash right now, it gives them peace of mind that they are helping a family member, they can leave all their shite in the attic, they'll have a place to stay when they come back to BR, etc, etc. my cousin gets a 5BR house for her family thats well appointed, for less than she pays in rent
in the right situation its a good deal for everyone
my parents are owner-financing their house to one of my cousins. my parents don't need the cash right now, it gives them peace of mind that they are helping a family member, they can leave all their shite in the attic, they'll have a place to stay when they come back to BR, etc, etc. my cousin gets a 5BR house for her family thats well appointed, for less than she pays in rent
in the right situation its a good deal for everyone
Posted on 9/24/20 at 6:48 pm to cgrand
My situation is very similar to the one you described, the furniture would stay, attic/garage storage, extra bedrooms available to guest( until kids-far awag) etc.
But just need to confirm they aren’t in need of cash/lump sum. If they are sure about that then everything will be fine with owner financing.
Also need to double check on tax benefits/consequences
But just need to confirm they aren’t in need of cash/lump sum. If they are sure about that then everything will be fine with owner financing.
Also need to double check on tax benefits/consequences
Posted on 9/24/20 at 8:05 pm to MLSter
There are tax consequences to making a interest free loan.
Posted on 9/24/20 at 8:16 pm to MLSter
Long term interest rates for intrafamily loans are around 1% right now
Posted on 9/25/20 at 11:59 am to cgrand
quote:
family is different, though.
It’s not to me. If it’s a house it’s likely a lot of money to both parties.
My grandparents co-signed a loan for my worthless cousin and she bought a new fricking car. She stopped making the payments in under a year and they ended up with a 3rd vehicle they didn’t need.
Interest rates are extremely low, OP is talking about saving 1.5% interest a year and a couple thousand on the loan costs. I just wouldn’t do it unless it’s absolutely necessary. I’ve done them before myself fwiw.
Posted on 9/25/20 at 4:07 pm to baldona
Sounds like your cousin just a total POS, though.
My brother bought my grandmother's house from my dad and his two brothers and it's family financed and there have been zero issues. My brother got a good deal on a house that needed some love. My dad and uncles got fair market value, didn't have the hassle of listing the house and can earn a safe return on their money. It's a win for everyone.
My brother bought my grandmother's house from my dad and his two brothers and it's family financed and there have been zero issues. My brother got a good deal on a house that needed some love. My dad and uncles got fair market value, didn't have the hassle of listing the house and can earn a safe return on their money. It's a win for everyone.
Posted on 9/25/20 at 4:15 pm to MLSter
quote:
I’m ignorant to all of this so please excuse me if this is a dumb solution Would like to avoid banks and realtors.
A simple legal arrangement between family members is a good thing. Our country has passed generational property through family purchases for years. My concern is jealousy among sibling's. If that is not your situation, go for it.
Posted on 9/25/20 at 7:59 pm to MLSter
With interests rates as low as they are now, I would keep it clean and just do a traditional mortgage. The lump sum of cash your parents will get, as long as they invest it in something other than a savings account, will be more than any discount interest rate you would be paying.
Posted on 9/25/20 at 8:19 pm to whitefoot
quote:
Sounds like your cousin just a total POS, though.
My dad and uncles got fair market value, didn't have the hassle of listing the house and can earn a safe return on their money. It's a win for everyone.
I agree on all accounts. If everything goes smoothly there are rarely issues. The issues are always if there are problems. Banks have proven and frankly fair methods to work through them. Family brings in emotion.
Again all I’m saying is rates are cheap right now I just don’t see the reward to loan from family worth it right now.
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