Equity Home Loans

How does a family mortgage work for their kids?

Is it possible for a parent of a married couple to take a loan or a mortgage from a parent for, lets say $300k or so? Is this possible? How does the interest rate work? Is it determined by the lender (the parents)? Would this be a good thing for both the kids and the parents? Anyone can shed some light will be appreciated!

Public Comments

1. Parents can give a private loan (mortgage) to their children, or anyone else they want. Keep in mind, this is a business transaction. It would be best if this issue was handled by a lawyer. He/she would help determine a fair interest rate and other term of the loan.
2. Yes, what you're asking for is a private mortgage. The rate is determined by your parents, and you should definitely use an attorney and an accountant. They'll help you figure out what the amortized payments are. Its not really a good or bad thing. The first part is the parents will need the 300k to lend to you. also, make sure the taxes are figured into the payments as well. This way you don't have to worry about the county forcing sale on the house due to delinquent taxes. You'll need to find an escrow company in order to establish that as well.