Royally screwed... In laws..

[tacpoly]

This isn't a strictly financial decision. If it were, I'd say you can certainly do better with your $3K+ per month than stick it in a real estate transaction from which you will see no return until both your in-laws keel over.  But this decision involves family, which can be fraught. 

How much room do you really have to make a decision?  What alternatives would your wife agree to if you don't buy the house and let her parents live there rent free?  Would she force them to sell their house and move to a small house (are there houses that can be had for <400k) or even an apartment?  Have they considered refinancing to a 30-year mortgage?  How much of the original mortgage have they actually paid down?  Or is your only realistic option to negotiate rent because you're pretty much going to do this? 

If you're forced to "buy the house", make sure the property gets transferred to you & wife so there is no confusion as to who owns it (you wouldn't want the in-laws willing it to all the kids). The mortgage should be in your (you & wife) name -- don't just take over their payments.  Have them sign a rental agreement, even if you don't charge them rent and even if they're month to month, to formalize the rent relationship and specify who is responsible for what, including things like yard work. If you anticipate your brother-in-law to be a problem in the future, deal with it already. 

The thing that's going for you is that you can afford this. But it's best for all parties to be clear of the situation from the very beginning.  

[RSX]

^^ i agree with all of this

my only concern is WHY they can afford to do this and that is because they have been making smart financial decisions

and this will more than likely not turn out to be one of those

how many stories have we seen on here, where a relative pushes someone to help them - because they have the money - well unless they won the lottery, they have the money because of how they have managed it - and the person asking has not managed it

the question should not be Can I - it should be Should I

if one of my kids asked me to subsidize an overpriced car that they couldn't afford - i would tell them to sell it

and the ask would have been because they are under 25 and less mature and less finance savvy

these are 60 year old adults you are dealing with - there is NO excuse of -  well i want to keep living here because i am used to it

[Creditplz]

Thanks guys! Yeah I have a lot to think about... I'm upset they're putting me and my wife in this poisition and saying "either you help or we lose" I have 3 units that I rent out already and REALLLY didn't want more real estate.. not now since I believe it is way overpriced.  

now that I'm looking at my annual (SPY) gains and the compounding that's happening over the last 10 years I realllly don't want to do it.. but I'll do it ONLY if it makes sense financially to me.. we will mortgage the house in our name.. I'll let them know that their son will have no claim to the house as well.

I called DW before my last comment, picked her brain a bit. She's also on board with telling them to downsize and end of story, she said she will take my lead on anything I say. 

[RSX]

actually - that may be your best lever for getting this off your plate  - the brother in law (i am not slamming him as we have no details)

if you let them know that once the house is yours, it will NOT be a factor in his inheiritance, that may slam the door shut - in your favor

i say if your wife says she has your back (and rightly so) then you should say NO to this now - you already know it is a bad gamble - just tell them you ran the numbers past your accountant and that you are making the best decision for your long term financial goals and retirement plans

[coldfusion]

You really should walk away from this one as it's likely going to be a continual source of both marital and family strife until after both of your inlaws pass away and their remaining estate is fully settled, and even then there will likely be hard feelings all around with remaining family members for a long time.

If you must go through with having a discussion with them on Saturday do not have it in your own home.  You do not want to compromise your ability to conclude the discussion on your own terms by being able to simply get up and leave.

[Shooting-For-800]

What about buying 75% of it with you as the beneficiary so they still own and pay part?

[tacpoly]

---

@Creditplz wrote:

Thanks guys! Yeah I have a lot to think about... I'm upset they're putting me and my wife in this poisition and saying "either you help or we lose" I have 3 units that I rent out already and REALLLY didn't want more real estate.. not now since I believe it is way overpriced.  

now that I'm looking at my annual (SPY) gains and the compounding that's happening over the last 10 years I realllly don't want to do it.. but I'll do it ONLY if it makes sense financially to me.. we will mortgage the house in our name.. I'll let them know that their son will have no claim to the house as well.

I called DW before my last comment, picked her brain a bit. She's also on board with telling them to downsize and end of story, she said she will take my lead on anything I say. 

---

It's good that your wife is truly open to all options.  A lot of people say that, but they aren't really and all this resentment builds over time, specially if it's fueled by unhappy parents.  I think one should never mix families and finances unless one is willing to lose either one.  But I confess if it were my parents asking and I could comfortably afford it, I would do it.  Such is the gravitational pull of family -- it messes with normal orbits. 

Anyway, since they're her parents, shouldn't your wife be the one taking lead on this?  What I mean is, you and she decide on what to do, then she explains to her parents.  She can present it as both your decision, but you shouldn't be seen as the "bad guy making a strictly financial decision" (i.e. you don't really care what happens to them).  If this doesn't work to your in-laws satisfaction, you might have to live with the negative feelings for over 20 years!  Your decision/alternatives might be more palatable if they come from her. 

@Creditplz   Have you considered splitting the mortgage responsibility 3 ways:  in-laws, your wife, and BIL.  The house and mortgage would be under all their names. BIL and in-laws may not be able to afford the full mortgage, but they may be able to swing 1/3. It solves issues with BIL. Have your in-laws be responsible for collecting the payments -- in case BIL is the type to flake, he'd be flaking on his parents and they would have to deal with it. 

[Creditplz]

This is something we considered, the 3 way split between us but BIL makes no money and calls it his house all the time so... idk.. but then at the same time we have always been open checkbooks for each other and she doesn't want to go forward with it while we build our family and without my blessing..

if it were my family, well I'm biased.. but she really doesn't want to be the one to tell her dad, their bond has always been amazing and she just doesn't have it in her to say no, she has been working as a MD since mid 2016?. And I've worked on paying off those student loans so we can move further up the financial comfort level. 

They confirmed they'll be over tomorrow at 11:30AM soooooo... DW and myself have a lot to discuss after we are both off of work! 

[loyalsudz]

---

@Creditplz wrote:

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 🤦🏻‍♂️

---

It is merely a matter of perspective, there are other options especially if they meet the requirements:

1) Sell and do an annuity life time with the equity at $415K, they would be able to get a variety of monthly income along with the $2300, and do not quote me here but additional income could be as much as $5000+.  

2) Keep the house and do a reverse mortgage which you do have to be careful of but it will allow them to keep the house and have a cash out of the equity without losing the house and since you and your wife seem by all accounts independent financially, you may be able to help them in other ways so they are not taken advantage of and run out of funds.

3) Keep the house and try to refinance, after you pay off another $415K, this will reset the mortgage payment to what they owe, unless I misunderstood, which is approximately $70K and then with the $2300 that they make the payments will be no more than $400 per month.  This will allow them to be able to pay off the house and at quite the bargain and then they should get a written budget which includes subscriptions and things like maintenance which really ought to be in a monthly sinking fund.  Check with a tax accountant first, of course.

4) Take the escrow out of the payment and have them pay it semi-annually or annually.  This is something that you and wife can take on and it will in essence lower the monthly mortgage payment without any refinancing or annuity.  They can perhaps carry the mortgage and you and your wife or other family members the escrow of taxes and insurance.  Those increase and decrease depending on the market and they may have to shop around to get lower packages but traditionally, be warned, the first mortgage insurance is often the one that offers more benefits for the money but not in every case and nothing hurts getting a quote, unless they have made improvements that do not align with discounts as provisioned by the insurance carrier, ie, new roof, security cameras, usually reduce payments even may provide them with a check, if they paid out of pocket.  Additions, will increase cost, sorry if I am being captain obvious here.

5) Just pay the one month payment unless they asked for continual payments.  This is also, something that the Salvation Army will do over a mortgage owner's lifetime once unless they are in arrears?...

6) Do not save them at all.  With such a big property of your own, why not have them stay with you, surely any equity can afford an in-law-suite and extra cash in hand and you can forgo extra maintenance on the additional property unless you wish to rent it out to cover extra expenses and provide them with a little income.

I hope this was not too late for the discussion, you cannot save everyone but if you have to take out a mortgage yourself to payoff their home then it is very likely, that this may cause resentment, after all, you and your wife have been living mortgage free for sometime.  No, is not always a bad word, just listen first and before you do anything, make sure they give you at least two weeks to work on a plan.  This is a huge decision for all of you.  Good luck!

[Creditplz]

Welp...... after that 2 hour conversation it came down to (FIL) essentially saying we owed him cause he signed in my DW Parent Plus loans for her undergrad (all paid by us since end of 2018/ early 2019). he also went on to say that the government essentially gave me free money ($190k & 190k PPP both forgiven) and 500k EIDL (has to be repaid but interest is so low... made financial sense). 

after that he went on to tearing up saying he felt like a failure and that he's helped us so much (never given me a dime or a roof to stay under and I've always done okay for myself). 

needless to say, DW and I set up a "signal" we would use if we felt like we just didn't want to do it at all or things escalated... she used it before me!! 

He kinda berated me on the new car I just bought (posted on Ficofourms! and how we won't end up with anything cause we spend too much (DTI is very low) and life is about sharing what you have. 

I sat there and for a minute smirked cause, DW and I wanted to offer a small injection funds to help them a bit (DW funded) that quickly flew out the window. 

kinda got upset that they (FIL & MIL) hinted at DW that she was supposed to get half the house and her BIL will now receive all of it (what house if they can't afford it??.) 

So long story short; we will skip. They have 420k of equity, if they're wise they'll take it and downsize immediately.

agggghh DW is sad, so that's why I didn't come on and update immediately!