Royally screwed... In laws..

[Creditplz]

My in-laws have asked my wife.... if WE can pay for their mortgage.... needless to say, I said no to my wife and now she's thinking it's a good idea. 

she wants us to buy their house instead at $485k (what's left on the mortgage & HELOC) house is valued at 900-920k in the inland empire, but we let him live there the rest of their lives... rent free.. 

they cannot afford their mortgage anymore, he resorted to doing Uber but has now retired with a $3900/mo mortgage (mela-roos + taxes & insurance included) and his retirement is $2300 after his Medicare costs also wife was a homemaker. They also don't want to take the equity and downsize cause they have "a standard of living" they don't want to go back on..... I don't understand....

not sure if this is a good idea?. DW wants to do it and said she can even buy it herself but wants us both to do it so her parents feel happier about the situation..

What did I get myself into 🤦🏻‍♂️

[Shooting-For-800]

I would not do it for free.

$500k should be what $3k per month with taxes and insurance?

$500k/$36k per year = 14 years.

You could lose money.

It could cost you $100k just to sell it.

Market is inflated right now.

It could lose $100k in value.

Next think you know, you gotta a real mess on your hands.

Can't they pay anything?

$1000 per month?

[Creditplz]

Wife talked to them a few minutes ago, he said that if he's giving up all the equity and "it could be worth a lot more in a few years" he would prefer to pay $0..... 

aghhhhh... told my wife no... I told her if he can subsidize $1300 in payment (I'm expecting this to go down to $1000 after he thinks about it) then we can get something rolling..... 

it's irritating that they're talking like they're doing us a favor when after 6-9 months they'll be out of savings and lose the house 😑

[GatorGuy]

Should you do this? No. Mixing family and finances is a terrible idea and this plan ranks high on the ability to go bad quick.

It is not a horrible deal from your stand point if you can afford the payments and afford never to receive any rent from them. You are receiving $415k in instant equity for taking on a new debt of $485k. You can think of the $415k as their rent payments if you wish. The value of the house if in a good area will only increase long term. 

However, they are in a horrible place financially and who knows what they might ask from you in the future. If this is a large house can they even afford the utilities? Who will pay maintenance costs? When they see the future equity/house value they may ask you to help them out more. 

[Creditplz]

The payment won't hurt us financially as our home has no mortgage, and the last 10 years have been just saving and putting money in ETF's to compound my savings. Their house is in a very good area 3350sq ft.. 

that's my issue... their son (brother in law) can't afford to make the payment, and they can't afford to make the payment... if something happens to them he will want half the house I'm sure... and if I buy it... well, it's my house! 

DW is reallllly lobbying on their behalf but I think they might be forced to downsize very soon... that or sign a annual lease at $1000-1300/mo. DW agreed that we both have to be on board and she can't rouge it  like I do with cars....

[Shooting-For-800]

how old are they?

[pizzadude]

This is a tough situation for certain.   A couple of things come to mind:

--There's more involved than just the house purchase.  If you own the house then you'll likely be responsible for all of the upkeep, so take time now to list all of the possible maintenance items:  roofing, HVAC repairs, landscaping, etc..

--Get them to sign an annual lease, they need to be responsible for paying rent monthly like any tenant.  Are you really ready to be their landlord?  What if they're late with payments, or stop paying?  What if you decide to sell the house and they won't move out?

--Put time constraints on how long you want to do this, like plan to sell the house in 2 years, 5 years, or whatever timeframe you're comfortable with.  Put it in the lease and get them to sign and agree.  

-- Get them to start thinking about where they're going to move.  If you're buying the house for only the price of the outstanding mortgages / HELOC then they wouldn't have any money to move / buy / rent another place.   Maybe consider upping the price a if they'll agree to use that money towards their next home.

[sccredit]

What are the chances that a house in the Inland Empire will hold $900k+ of value? I'd say very very low. Their equity is on paper right now because they aren't willing to sell and downsize. They obviously can't refi and access it either. So the choices are you take on all of the risk with little reward and a ton of headache, or they lose the house and maybe retain some equity after foreclosure. He doesn't have the magic equity he thinks he does unless he's willing to sell.

On the lease side if they aren't willing to pay anything now what do they think they will find in the open market? They could probably move to Hemet and live in a 1 bedroom for $1,300 a month. 

[Creditplz]

Yeah, I told DW to invite them over to our house on Saturday to talk about what we MIGHT be able to do... we will hash out all the details I'm comfortable with and not... they're 63/64.. I'm okay with them there for 10-12 years with monthly payments at $1300. 

They won't move to Hemet cause Rancho Cucamonga is the only city they know.. they're cash poor currently and I know it so if they don't like my offer come saturday.. well condo downsizing like I suggested looks more then the likely outcome, hate me if they want to!

[RSX]

i would say that a couple in their 60's doesn't need the upkeep of a 3500sq ft house anyway - lots of people downsize after retirement

my personal plan is to have a ranch style home (single storey - also called a bungalow) at about 1500-1800 sq ft max when i retire

why do i want to clean a 3300sq ft house in my 60-80's ?

also utilities will drop by at least 30-40% on a monthly basis

if they want to stay 'in the style' they have become accustomed to, that requires money - their money, not someone elses...

and - i don't know the full story, but a simple guess would be that the reason they dont have the money to keep the house, is because the house has been too big/too expensive for them for quite awhile

you are in a tough spot, but if you busted your a$$ to payoff your mortgage and start saving, why would you essentially start over again on someone elses mortgage 

i would say they need to sell and downsize to something they can comfortably cover on a monthly basis

my parents did this in their 70's so that they wouldnt leave the kids with a big house to deal with when they eventually move to a retirement home - they were able to get their new condo (1600sq ft) setup the way they wanted to, and used about $50k of equity to fix up what they wanted - all one floor - all manageable by 2 people and enough rooms for one person (or couple) to stay over occasionally

all the best to you in this tough situation