[fintstone]

I guess it depends on the family. It worked very well for me. If the paperwork is drawn up properly, it is just business and everyone gets a deal. Obviously if everyone involved does not trust the other's ability to follow through with their commitment, there is a problem and one would be advised to choose another solution.

I would do the same again today. For example, I have an "underwater" home (by about $300K) at 6.5% variable rate that I cannot refinance at the current low rates because I would have to bring about $350K cash to the table to do so. I could pull that much out of my 401k, but I would incur a penalty and it is pulling in about twice that rate. If a relative had $350K in the bank drawing .05%, I would happily give the 5% for that money and buy down my loan to an amount where I could refi the remainder for 15 yrs at 2.75%. It would be a win/win. I can clearly show that I have the ability to repay the amount (because it would be a no collateral loan or the collateral would be just my word, another rental home, another investment, or my 401K)...so I could get the mortgage on the remaining amount. Both of us would "win" in this scenario. Obviously, we would have to trust each other and draw up papers. In this case, it would look more like a bond than a mortgage.