My wife and I want to help our daughter and her husband buy a home. They currently have poor credit and even with us providing the downpayment, they could not get a mortgage themselves. We thought we'd buy the house and let them gradually buy it from us. How can we set this up? Lease w/ option to buy? What about improvements they make to the property?
2006-08-08 21:39:36 · 10 answers · asked by johnpublico 1 in Business & Finance ➔ Renting & Real Estate
One of our biggest mistakes in our almost 30 yr marriage was letting my spouse's parents help us buy our first home. It ended up costing us thousands, after we moved 2 yrs after purchase and had to rent the home out instead of selling just to keep up with the mortgage payments.
While their intentions were "well-meaning" it was poor financial planning on our part and selfish on their part, to be involved in something so personal that we couldn't afford.
They probably want your help, we did back then, but do not realize that saving for a home is much better planning than rushing into something they may not want.
You are their parents, do you really want to become their landlord & mortgage broker? Money ruins family relationships....
2006-08-09 02:10:00 · answer #1 · answered by Anonymous · 0⤊ 0⤋
First off. Be Careful.
But you might want to do a option to buy contract with her. Buy the house, and have your attorney draw up a 24-26 month contract. Make sure the lease amount per month is the amount of the mortgage or slightly more. Then when they go in to the bank for the loan they can show a successful payment history in the amount of the up coming loan.
Make sure you have an attorney draw up and review the paper work. You don't want this to come back and hurt you financially.
Good Luck
2006-08-09 04:45:25 · answer #2 · answered by Jon H 5 · 0⤊ 0⤋
I would advise against this. I have seen so many plans like this falter and fail. If you do decide to purchase the house and rent it to them do you plan on keeping it in your name until they completely pay it off or not? You don't need any specific plans for how they pay it off on paper unless you think they might not be able to pay one day in the future which is why I'd keep it in your name until they completely pay it off. That way if they stop paying or can't pay you won't have trouble getting them out of the house. If they make improvements it won't effect anything until you or they go to sell it again (hopefully) years from now. And unless the improvements add to the heated square footage of the house it won't add to the retail value of the house anyway. It would make it more desirable and help it sell faster but wouldn't add to the value without more heated area square footage. This is always a risky situation and I understand you are trying to help them which is nice. Is it not an option to help them regain their credit to let them eventually purchase a home by themselves? This is a safer option.
2006-08-09 04:50:55 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You can get the mortgage and let them repay it little by little. It's the easiest solution. In Italy it's easier this way...simply because the documents and guarantees they ask are horrendous!!! I don't know about your country.
For the home improvement...maybe they can get a loan, since it's a smaller amount.
Also, for home improvement you can save by doing a few things yourself. It won't be perfect...but there's more satisfaction when you make something all together. And you'll get to spend more time together!!!
2006-08-09 04:46:07 · answer #4 · answered by Blue Blue Blue 6 · 0⤊ 0⤋
Would you take the mortgage and just have them pay you the monthly payments? That was the first thing that came into my mind, but it wouldn't help them establish good credit for themselves. That is a conundrum.
2006-08-09 04:45:16 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Both your daughter and son-in-law should have strong future credit like a proof of bank statement and conformation job so in future you won't have problerm gradually selling the house to them.
2006-08-09 04:47:07 · answer #6 · answered by Anonymous · 0⤊ 0⤋
not knowing much about realestatel,i would ask an atty or cpa familar with real estate., and ask if we could put house in both family names. my wife and i should be able to pay for the improvements.my wife and i could make an annual gift to each one of them.lf we kept some onership of the house, we could pay the mortgage.and taxes; and take tax deduction on them.I would first check out with CPA .
2006-08-09 11:46:31 · answer #7 · answered by Ivan M 2 · 0⤊ 0⤋
Buying the house would help them.
Get them to pay you guys the installment on a legal document.
You can still be the owners and you can decide whether you want to gift it to them or their children later on or even sell it.
2006-08-09 04:43:18 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Just let them find their own place that they can afford with their own money.
2006-08-09 04:43:59 · answer #9 · answered by Kottonmouth King 1 · 0⤊ 0⤋
what ever you do....DON'T CO-SIGN...
2006-08-09 07:54:26 · answer #10 · answered by JOEYSMOM2 4 · 0⤊ 0⤋