My MIL has lived/rented in the same house for 20 years and earlier this year the owner died from old age. Well, the property mgmt company wants to sell it and asked her if she would like to buy it for $140k. My MIL lives off her SS and her very p/t job (10-maybe 15 hours a week) so she can't afford it. My SIL recently (June) moved in because her work contract ended, and she decided she didn't want to teach English overseas anymore. She's currently unemployed but working on a certification for a job she's eyeballing. She tried to get a home loan to buy the house but of course she was denied. Now they are looking at my husband for help and he wants to help. My issue is that it would add another $500 to our mortgage payments and increase our total home loan. I told him if it was short term like a year or maybe 2 ok, but it's not. He's an amazing husband, father, brother, and son and I'm glad he's who he is BUT I don't agree with this. I think his mom needs to move into a senior citizen home and not put this kind of responsibility onto her kids because she doesn't want to move. Am I wrong for feeling like this? Has anyone refinanced their home for a parent?
It's hard to believe that MIL can afford $1,400.00 monthly rent. That is what they would be charging if the house was worth 140k. Standard rental rates are 1% of the value.
Do you know if she has a triple net lease? This would be what you guys would do with her, it makes her responsible for ALL insurances, property taxes, maintenance and repairs.
Is her area falling apart or revitalizing? This is really important to know, because a neighborhood falling apart will devalue your house. It makes it hard to rent and it can turn into a slumlord situation.
This isn't a simple bailout, this is an investment that directly effects your investment in your house. Which, for most people, is the biggest investment they make in their lifetime.
I find it incredibly selfish of your MIL to put you guys at risk so she doesn't have to make any changes. Oh and SIL needs to get a job, any job, while she is getting her certificate. To expect her mom and brother to support her is just gross.
Even if he wants to buy the house as an investment, he should never borrow money to invest. That's a big no no. Would he borrow $100K and put that in stocks? Of course not. So why borrow money to invest in a house while the housing market is on its way down.
Have him call Dave Ramsey radio show and ask. Dave Ramsey is the most popular financial advisor on the radio. And he's got common sense.
Here are a few big things on the down side:
--$100,000 more in debt
--be in debt for ___more years.
--$500 more in monthly mortgage payment.
--$___ more in real estate taxes.
--$___ more in repairs and maintenance.
--What if mom and sis stop pay rent? He can't kick them out. What then? Lose more money every month.
--If you and your husband lose your jobs for whatever reason, you will risk losing both houses.
And the non money issues:
--Mom and sis calling any time, day and night, for drain clogs, roof leaks, electrical problems, etc.
--More responsibilities and headaches and less free time for your own family.
--More resentment towards mom.and sis for putting the extra burden on you and your husband.
--May ruin the relationship with mom and sis.
My personal policy: I don't do business with family and friends.That's the recipe to lose both money and relationships.
If Mom cannot afford to buy the house and do the upkeep, then the son should not buy it for her. At 74 she needs to downsize. Its not fair that she may put her son in financial straits.
My son is currently renting from a property mgmt company with the option to buy and I can tell you they are most likely charging higher rates than a mortgage company for that house and selling at an inflated value. They're looking to dump the house because the real estate market has tanked.
And you have to refinance your house to buy another house?
What is the worst-case scenario if you don't ever get any rent out of your MIL and SIL? And the house value drops? Can you and DH withstand this extra burden and/or loss? Would it be worth it? Real estate is only a good investment if you have a good lending rate and you buy right. Maybe consider having a financial advisor give him a professional, objective answer, based on knowledge and experience, and not on emotions and feeling sorry for/pressured by his family members? His Mom is making a foolish decision to plant her flag in this house. 100% emotional decision. 0% wisdom. I'd say it's a real hard NO.
At 74, I think moving into a senior apartment is probably a better plan. She won't be able to take care of everything it takes to take care of a house, a driveway, etc. etc. If she got into a sliding scale apartment where you pay what you can afford, she could stop working (unless she really wants to work!).
This is a financial decision, and the answer lies in the details of you and your husband's financial situation. This includes your ages, salaries, assets, debt load, job security and where your kids are in terms of relying on you for support for education. It also has to do with whether buying this home is a good used of your funds as an investment; borrowing to invest CAN be a wise move for folks who are financially secure when interest rates are low.
From a caregiving perspective, how is MiL's health? Is she still COMPLETELY independent and able to manage housecleaning, snow and leaf removal (either herself or able to afford to pay to have it done)?
What home maintenance tasks were previously done by management company that will now be on her, or on your husband to perform?
Will you and husband buy the home and rent it to MiL?
Is he being guilted/manipulated into this decision? Read up on F.O.G--Fear, Obligation and Guilt.
Where's your DH's thinking at?
Today, I just realised how similar (in thinking) this is to the Husbands who say "Mom is moving in".
It's their Me-Man-Fix-It for you Momma instinct that kicks in. It comes from a place of wanting to help. But it is a knee jerk reaction. A *reaction*.
But this isn't just fixing a light globe or a leaky tap..
This would be an ongoing financial burden + ongoing maintenance labour (no doubt too) - so MIL can avoid the emotional upset of downsizing & moving house.
A financial burden for you & DH. So MIL can avoid change.
This is more like setting yourselves on fire to keep MIL warm...
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