My mom's house....

[Trinitys 134]

Ok this is totally off topic but I think I want to buy the house my mom is living in. I would like to get some advice from some people who have been around the track a few times more than me.

Here is the background. It is owned by my sister, Kim who also lives down the street. She owes approximately $55,000 on the house, has an adjustable interest which is currently 11% + escrow and pmi. Taxes are good on this place. My sister can’t refi, her credit is horrible. My mom makes the payment when she can but has been relying on me for all her bills since September; she finally went back to work last week at the post office. My sister can’t cover her own mortgage let alone my mom’s place too. The majority of the time my mom can cover her bills with no problem what so ever with money left over.

So my thought on this is, if I pony up the cash for her mortgage and other bills when she isn’t working, wouldn’t it make sense to use my credit to get a good low rate, lower monthly and no pmi? Instead of covering 8-900 a month, I could maybe pay 4-500 plus it would be fixed rate. Interest rates are insanely low right now also. It could get written off as a rental property for tax purposes and I wouldn’t have to worry about my mom losing her place because of something my sister does.

I do all the repairs if needed, I mow the property, I fixed the septic, hell I just paid 900 a couple months ago to have the system hydro cleaned and pumped.

 

It’s the white house directly across the street from where I live right now, in the background, needs some TLC but if I owned it I could write everything off as repairs to the property.

 

Any advice from you guys on what you think i should do, things to watch out for etc....

 

[ForceFed70 14]

Hmmm, well most of this is more of a "what do you want to do" sort of stuff instead of financial advice.

 

11% is certainly way high these days.

 

Have you considered having your sister or mom re-negotiate the mortgage and have you co-sign? That way she can keep the home in her name, but can also leverage your credit rating to get a decent interest rate.

 

This is a 2 way street tho... when someone does a credit check against you, it will show the mortgage and potential debt which will effect how much you can borrow.

[bnickel 10,004]

i think either option is better than what's happening now but it's your moeny and a big chunk of your like will be invested in it. i think i would talk to a lawyer and see if there are any other pitfalls or bonuses that may work for you or against you, maybe he can advise you of an even better option

[ForceFed70 14]

Agreed. Although I don't think a lawyer is the right choice. Some sort of a financial advisor would be better.

[Boogerschnot 12]

Yep,, It sounds like both options are a lot better than whats going on now.

[SunnDogg 18]

Talk to a good CPA or Financial Planner and run the numbers with them. Having done something similar myself it can be both a blessing and a curse. You will need to count the rent as income which may affect your tax bracket, but you do get some write-off's that can help. The biggest challenge for me was that it limited my ability to purchase my own home and comes up when making big purchases. If you're already in the house you plan on staying in and not planning on buying a new car, etc. it might be worth looking in to. Could save all three of you some decent money and locking in the rate would be a huge peace of mind for me. Good luck with whatever you do.

[Topless69GT 28]

I am a Mortgage Originator and right now this type of loan is very tough. I did not see what the value of the home is but you may run into trouble getting this financed. What you have is a "Non-Arms Length" transaction meaning you are related to the "seller". They are going to be very tough on this loan and require that you put down a good sized down payment (20%) or get a gift of equity from your sister (20% or more) if there is that much equity in the property. They are then going to look at your sister's pay history on that home and see if they think that you are trying to purchase it to avoid her being foreclosed upon. If she has any late pays in the last 6 -12 months they are not going to like it. Your interest rate will be much higher than rates being advertised for "Owner occupied" properties. Expect up to 6.5% -7% fixed with points being paid. Still a lot cheaper than 11%. Lot's of lenders won't do Non-Owner occupied properties at all right now.

 

 

Your local bank might be the best place to try and do this loan as opposed to a national mortgage lender. Sometimes they have loans that they don't sell to Fannie Mae or Freddie Mac and can write their own rules. That way you may not run into as many problems and maybe get a better interest rate.

 

Another avenue is to see if you can get an FHA loan with your mom as the borrower and you as a co-signer? That way it is "Owner occupied" and FHA is the way to go right now with only 3.5% required for a down payment.

 

Good luck with what ever you decide to do. If you want to send me a PM with any scenarios that you run into I would be glad to give you some help. FYI - I love the grande' That is a good looking car.

[d.reese 13]

Well buying a house is the hardest thing to do ( liken to having a baby-takes 9 long months to get em here) during normal times. This would of been easier three yrs ago for sure. Its time to get with it (low interest rates) dictate the effert for sure!

Never know till you try. Good luck.