Timeline for Buying a home with down payment from family as a "loan"
Current License: CC BY-SA 3.0
13 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Apr 13, 2015 at 9:56 | comment | added | algiogia | +1 "it's a bad idea to mix business and friend/family you don't want to lose". You'll lose business and friend. | |
| Jul 4, 2014 at 0:39 | comment | added | littleadv | @gnasher729 incorrect. Buyer goes from zero to 400K house and 400K debt. Relative goes from 120K cash asset to 120K loan asset. Private loans are recourse loans almost universally, in this scenario the relative is very unlikely to lose anything. Definitely not the whole 120K. | |
| Jul 4, 2014 at 0:33 | comment | added | gnasher729 | Buyer goes from zero to 400K house and 280K debt. Relative goes from 120K to 0K. | |
| Jul 2, 2014 at 20:40 | comment | added | littleadv | @gnasher729 no, buyer was not OK. Buyer was -400K in debt. | |
| Jul 2, 2014 at 15:24 | comment | added | gnasher729 | Before the purchase: Buyer has 0K, relative has 120K. After the purchase: Buyer has 0K, relative has 0K. Clearly the buyer invested nothing, the relative invested 120K. | |
| Jul 2, 2014 at 7:43 | comment | added | littleadv | @gnasher729 But the buyer did make an investment. Who pays the cost of the financing of the other 70%? Who carries the risk of foreclosure? Private loan is most likely a recourse loan - unless the OP declares bankruptcy, the relative will get his money back. | |
| Jul 2, 2014 at 7:41 | comment | added | gnasher729 | It's only 16% APR if the relative made 100K for a 120K investment, while the buyer made 100K for no investment at all. And if there is no gain, the buyer has received a seven year loan at no cost whatsoever. | |
| Jun 9, 2011 at 6:32 | vote | accept | user536048 | ||
| Jun 9, 2011 at 4:17 | comment | added | user536048 | Sorry, that's what I meant. I am learning about balloon loans now. | |
| Jun 9, 2011 at 4:11 | comment | added | littleadv | @user3885 - you will owe, you just won't make payments. I guess that that is what you meant. You can take a balloon loan and still have less interest to pay (if the prices are really going up, if the prices are going down though then the loan with your relative is a good deal). | |
| Jun 9, 2011 at 3:37 | comment | added | user536048 | Thanks a lot. That is a very good way to think about it. So, in your example, I agree that it's quite an expensive loan at 16% APR, but I won't owe anything for the first 5 years. That is a big deal for me. Your suggestion about not mixing business and family is something I need to fully think about. | |
| Jun 8, 2011 at 10:45 | history | edited | gef05 | CC BY-SA 3.0 |
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| Jun 8, 2011 at 8:10 | history | answered | littleadv | CC BY-SA 3.0 |