My DH wants to refinance our home and use $100,000 to buy his 74-year-old mom the house she's renting. Am I wrong to feel the way I do?

This sounds like disaster written all over it. Does he really want to be your mom's landlord? How close is it to you? Is she going to pay rent? Which you'll probably have to claim as income?

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!).

Go to www.bogleheads.org and post this question.

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.

Your husband is a moron. You will be paying for mom and sister to live there for free. Queue the temper tantrums and pouting and guilt trips from hubby when you insist you dont want to do this.

You’re right. Don’t! What happens if sister-in-law continues to live there, doesn’t maintain employment or maybe she does, and the house is in mom’s name? She wills the house to sister-in-law and you’re out $100,000? What if sister-in-law is in a house that YOU own and mom dies and you want SIL to leave but she won’t? Look
up eviction laws in your state because if you want her out and she won’t budge, you’ve got an expensive legal mess. If SIL isn’t living with mom, who maintains the property? You? What if you and husband divorce? Or he dies? The $100,000 is a marital debt that you, my dear, will be responsible to pay. MIL should take care of her own self. She seems to be yet another elder who didn’t plan well for her old age, and you don’t need to take on a debt on her behalf. Be firm and vote no.

Would the house be in your name?
If it would be in anyone else's name...big time NO.
If you and your husband would be the only owners. Then it could be an investment.

Mixing money with family can be a horror-show nightmare, regardless of good intentions. To avoid such, I would want a very CLEAR picture of what this is.

ie Would this be an INVESTMENT or a GIFT? Or is DH's aim to HELP?

IF you wanted an investment, would an investment property be your choice?

If so, is the property in question a good choice?

Would you be able to charge market rent (or close to)? Get a decent return?

If no, then refinancing to fund Mom's housing (+? SIL) would not be a solution that is financially suitable for ALL of you. It would be more like a GIFT to Mom (+? SIL).

If you can afford such a generous gift & both agree to give it - go forth & do so. With no further agenda.

However, if this is not a GIFT. Stop now & really evaluate.

There may be other ways to HELP Mom besides footing the bill. Locating specific housing advice for older women could be one.

..."property mgmt company wants to sell it..."

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.

Sinxe you and your husband have to borrow against your own house, then you two can't afford to buy the rental house and have a bigger mortgagee. So many things on the down side, in addition to taking higher financial risks.

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.

Lots of good answers here, so please keep us posted, OP! I hope hope hope you can get out of this.

It's not an investment if you have to borrow money it's additional debt. Refuse to sign the refinance papers. There are potentially problems if your SIL doesn't get a job. Refuse to let your MIL's name be on the deed. You don't want to risk her willing the house to her daughter.

TXliving75, "investment properties" are a different ballgame compared to a home that you actually live in.

For one, the mortgage will be a investment loan.... higher down-payments.... higher interest rates. Reason the rates are higher is because investment property is a risk. Don't forget about closing costs, pro-rated taxes, other taxes, title insurance, home insurance, etc.

Second, said property would need to be declared on your income tax under Profit & Loss. No rental income to cover expenses, yet hubby is paying property taxes and other declared expenses.

Third, expenses. Does hubby have deep pocket to pay for those maintenance things that show up out of the blue? How old is the roof? If it is 25 years old, time for a new one. How old are the appliances? I had one rental property where 3 appliances all broke down in one month, I replaced them with new ones. Is the plumbing in good working order? Has the property been tested for radon? How old are the windows?

Is hubby ready for midnight panic calls that something isn't working in the house? Is he handy when it comes to fixing things? If yes, great. If not, money out of pocket.

So much to think about.

No, ur not wrong. Husband needs to realize how much it will effect your future. I am pretty sure my husband would not be giving his Mom 100k if he felt it would effect me in the future. Everything he has done financially is to protect me. Maybe your husband needs to talk to a CPA. He can show him why giving Mom the money would be detrimental to your future.

I would not even attempt to do this in this financial climate. You are probably 45 to 50 yrs old. I agree, that at Moms age this gives her the opportunity to downsize. Life changes and this is a change she needs to except. When she rented, she had to be aware that the house may sell someday. I agree, if she owns it, who is going to do the upkeep?

If I were to go into this agreement it would be with eyes opened wide. If I bought the house, I would be owner, I would be on the deed with no one else. Mom would continue paying me rent to offset the cost to me. So would sister as long as she is living there. She needs to get a job. If she is a teacher, pretty sure she could substitute. I have a friend that subs almost every day somewhere in our school system. One reason I would do this is because of Medicaid. If Mom needs Medicaid at some point for her care, better a house is not in the picture. My Moms became an Albatross around my neck. Things would have been so much better if her SS had been going for her care in an AL and not into the house.
And a contract or lease (written up by a lawyer) spelling out to Mom and sister what they need to pay in rent and their responsibilities concerning upkeep. Sister is living there, she can mow the lawn. But then, I would not be buying a house for Mom.

P.S. that CPA, maybe he needs to sit down with Mom and show her how, if the house goes in her name, what she will be expected to pay now she owns a house. Rent was probably based on a mortgage based on a house bought years ago or it was paid off. Her payments may be higher and she is responsible for everything. Taxes for one. She needs to understand what she is asking of her son. What Mom wants and what she can have are two different things.

Everything about this screams bad idea. I’ve seen firsthand the heartache that comes from mixing family and finances and heavily encourage you not to do this. It will only lead to further expectations of your husband being the answer to life’s issues

In a marriage, this will decrease your joint marital assets (equity in your own home).
It will increase joint marital debt.
It will increase your joint monthly expenses.

Not an investment, but a very risky change in assets.

I agree with other's comments, do not borrow to invest.

You also need to consider how this would affect you financially in a divorce.

If you guys do this, I really recommend you don't but, if you do, BEFORE you sign any papers, get with a real estate agent and find out what the comps are for that neighborhood and get inspections done, these 2 things will let you know if the management company is soaking MIL on price.

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.

That has got to be one of the worst ideas I’ve ever heard.

Think about what would happen long term. If SIL ends up caring for mom in the house and something happens to mom you might have a heck of a time removing SIL from house.

Just buy the House - If your MIL has your SIL Helping her that is a win win situation . People who end up in nursing homes dont last very Long .

20 year house is probably gonna need some expensive repairs and maintenance is ongoing. The 500 addition to the mortgage may not be the biggest problem. Who will pay for all that? Why not just find her a similar place for the same rent. I understand she doesn’t want to move but sometimes that’s just the breaks.

How much rent is your MIL paying for this place? If the $500 a month added to the mortgage is less, and she pays that to you and DH in lieu of rent, this might actually become quite a good investment. Is the house suitable for MIL's needs for the next 10-15 years, all being well?

TX, I image your gut feelings to say no on this have been validated.

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...

In reading the posts its brought up that the sister is living there, the sister can care for the mother. The sister has been living overseas. There is no guarantee that she will stay living with Mom. She could get her dream job and move away. Then TX and husband are left with a house they don't need and no one to share the rent or mortgage with Mom.

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 mother got involved in a real estate situation with one of my brothers 26 years ago after my dad had passed away. It was a mess. My Mom died in 2016. It took me until 2021 to get completely untangled from my deceased brother's children. Beware of financial dealings with relatives.

Wow, taking on $100 K is an extreme burden. You are certainly justified in refusing this imposition. Sadly MIL and sis have put you in the middle. Shame on them. Hoping your sweet husband can find the courage to refuse.

DON'T DO IT! You cannot afford to buy this house. Paying $100,00 for a home is expensive in addition to upkeep on this 20+-year-old building. Financing requires a steady full time job. With a possible recession coming, job security is unknown and may spell financial disaster, possibly placing its occupants on the street. Mother should go to senior living or AL.

He is the way he is and that’s why you love him. If his moms SS is enough to pay the taxes Maybe you could purchase the house in your name and tell mom and SIL they can live there for a nominal rent (for the upkeeps). I wouldn’t count the income from her part time job which could abruptly end for various reasons. You found a good man, congratulations.

I know a couple who refinanced their home and invested in rental properties with success — and historically low interest rates. A few years back they rented to appreciative family members who pay on time and no issues.

I’d ask DH to put emotions aside and justify it as a good business investment.

Are you giving up a low interest rate on your house to refinance a higher loan amount at a higher rate?

Since sis is unsure of her future, can mom pay the full rent and cover your costs?

How many years are you talking? How does renting from DH compare to paying for assisted living? Around here, AL is easily $60,000/yr.

If mom’s in AL and can’t pay, does Medicaid kick in? If yes to AL, but not rent, that’s money DH is leaving on the table.

It seems Mom has been consistent in paying rent but would she stop paying rent because it’s her son? Then what? Would DH evict his mom?

Would mom settle into AL better now than when health issues force it?

Is your property manager DH ready to run over every time something needs to be fixed?

Is the $140,000 a 2022 inflated bubble price and the value will go down?

What renovation does a 20 yo house? Will DH give up his weekends for home reno?

Is the property a good rental if mom needs to move?

The house would be in your name. Would that affect your ability to borrow for other purchases? Like a car?

If DH can address all these concerns, go for it.

Dear Dr. Laura had an expression : "No good deed goes unpunished". Is she still on the airwaves somewhere? I miss her.
No, no, and no would be my advice. I don't say you don't have a good man there, because clearly you do. But I think he is misguided and I would go to counseling with him with a licensed Social Worker in private practice or a financial planner before I attempted to do this, with a whole raft full of reasons that I could go into but I would bet you already considered. Including that, should your Mom need care in future and medicaid, the claw back for care would gobble that home up in one bite.
IF you do this, insuring her home, then I think HOW you do it is worth passing past a real estate attorney.
Please proceed with caution and watch for those triangular yellow "CAUTION " signs, because I want only the best for you and your kind guy.

I do see that your husband is trying to solve a problem, but it doesn't seem you think the finances are going to work out well. Intuition, facts, whatever, in adding up the numbers, can it work? Could you help him look into another solution for his mom? I'm 74 and would never let either of my sons take out an extra mortgage for me. If I were to lose this house I bought 20 years ago, that's my problem, not theirs. I thought a lot about my situation as I watched what happened with my parents. They planned well financially, just didn't know that Alzheimer's would hit her and that he'd fall and break his tail bone. These are the kinds of things that happen though. I think about how much longer I can care for my house? Maybe another 7 or 8 years. Will I be able to afford to pay for yard and garden work like they did or will I have to sell this house I love and find another place without a yard. Downsizing would mean giving up my studio too. I hate the thought of it all, but that's life. My sons will offer help with moving me and such, but no way are they to give me any money or put themselves in debt over me. Maybe I'll let them bring me groceries on occasion, help me find the help I will need, and basically watch out for my well being, but NO money coming my way from them. It goes the other way. I will help them with money instead if they need it and I'm able. Now, if I should get Alzheimer's, I have it all written down for them how they should manage my care, so if I'm at some point not able to think clearly, they will know what I wanted when I had a brain.

The only question here is Can you afford $500 extra per month?
Draw up a plan of how you can or cannot afford it and show it to husband.
Sometimes seeing it on paper makes it easier to accept or decline.