Dear MarketWatch, My husband and I bought a second home two years ago, for $160,000, with a 30-year mortgage at 2.5%. We bought it with the sole purpose of renting it out to our son and his new wife.
But now, since they’re earning good money, they would like a home of their own. All four of us want to turn this rental agreement into a scenario where they own a house. “‘We are considering instead to keep the mortgage under our name, and serve as the bank, and have our son pay all the expenses and the house be his.’”
Dear Keeping, The plan makes sense to me. If your son pays all the expenses regularly for the house, including insurance and mortgage, while you act as a backstop, then I don’t foresee any big issues. And finally, keep in mind that ultimately you will be responsible for the mortgage in your old age, regardless of your financial circumstances.
Boycott Tesla
Rent to home agreement!
You wait until interest rates come down to sell it to him, like the rest of us.
That’s a bad deal if it were me I’d give the son the cash for a 20% down 15 year mortgage & have them pay it off in 7 then the parents are out of this risky deal.
That’s what I’m trying to figure out. The companies should say who gave the order. I was trying to make a living🤷♂️😂
Quit claim to son.
Be the bank
Keep it in your name, just put it in your will to them & have everything get billed to him (taxes, utilities) & he just covers the mortgage and give it to you. Quit claim the deed after it’s paid off
Sell it to him on a private contract and keep your mortgage in your name, at some point in the future switch the assessment if personal taxes are applicable in your state.
That's where English gets confusing. You both rent a property to and from someone. Unless you specify 'to'and 'from', you have no idea whether you're renting to or from.
Napkins and bic pens
Refinance the mortgage on the second home and have your son and daughter-in-law take out a new mortgage at the current interest rate, or give them the property as a gift or sell it to them at a below-market price and have them take out a mortgage.
The point about the tax benefit on the mortgage interest makes no sense at that rate / mortgage balance considering the standard deduction for a married filing joint is 27k - no way interest and SALT is higher than standard deduction
Can’t be done. But don’t worry it’s good for the economy for your son to take a rate that’s 3X higher. Consumers are strong with good balances. They can handle it.
Mortgage assumption through trust.
Deed it to them on the mortgage is paid off. They pay the mortgage off…
Do NOT do this. Let him inherit it to take advantage IRC Sec 1014(a)(1). Get a CPA to help you. And don't take tax or estate planning advice from Twitter