I'm fortunate to be in a bit of an odd situation. My wife and I have outgrown our rented apartment and plan to buy a $1-1.5M house in the next year. We can afford houses in that range, but of course the higher in the range, the tighter things will be. After we made this plan, a close family member shared that they want to help us with this purchase by offering a $500k interest-free loan indefinitely. The family member insinuated that they'd actually decline being paid back when we do go to re-pay, but obviously I'm not planning on that. Their idea is that they'd enable us to buy a 1.5M house while only needing the mortgage of a 1M house. I'm very grateful for the thought behind this and offer, but see some issues.
In addition to all of the problems with borrowing money from family, I'm trying to think through what happens in a best case scenario. In 2 years we're anticipating an unrelated Estate will settle and I'll inherit ~$400k. At that point, I would certainly try to pay the family member back. However, this would result in a lot of home equity 2 years into a 30 year mortgage. I realize this isn't a bad thing, but it doesn't really fit with my overall financial plan/preferences. If this gift didn't exist and I made an extra $400k, I'd gladly dump it into VTI rather than paying down my mortgage early.
Is there a financing solution to this "problem"? If I pay the family member back with the lump sum a few years into the mortgage, is the tool that would enable me to actually invest that money just a cash out refinance?
In addition to all of the problems with borrowing money from family, I'm trying to think through what happens in a best case scenario. In 2 years we're anticipating an unrelated Estate will settle and I'll inherit ~$400k. At that point, I would certainly try to pay the family member back. However, this would result in a lot of home equity 2 years into a 30 year mortgage. I realize this isn't a bad thing, but it doesn't really fit with my overall financial plan/preferences. If this gift didn't exist and I made an extra $400k, I'd gladly dump it into VTI rather than paying down my mortgage early.
Is there a financing solution to this "problem"? If I pay the family member back with the lump sum a few years into the mortgage, is the tool that would enable me to actually invest that money just a cash out refinance?
Statistics: Posted by tothemoon123 — Sun Oct 06, 2024 9:24 pm — Replies 0 — Views 42