Id like to hear your policy on loaning family members money.

[fastfredracing]

They actually asked us to borrow a down payment, and to co sign for a mortgage!!!!! This is my lady's sister.
They think we have money because I own a business, have some cars, and some rental houses. Nothing is further from the truth.
I told my wifey , that I love her, and will stand behind what4ever her decision is , but co signing a mortgage for them would be the single worst financial decision of her life .
We are basically going to give them what we can afford to write off as a loss.
They are where they are at because of poor choices in life, not because they fell on hard times.
We are where we are at , because we lived frugally our whole lives. Started out dirt poor, and really toughed it out for a long time till things started to look up, then still lived frugally .
This should be a fun thread.

[Porsche-O-Phile]

Any time, any amount, any reason. Family is more important than money. They've helped me out in the past and vice-versa. We take care of each other. Nobody has ever abused it or given anyone reason to doubt the integrity of other parties involved.

If someone was a raving alcoholic or drug addict, the rule might be different (as an example).

EDIT: Give money, yes - co-sign a loan, no way.

[stomachmonkey]

Oh hell no.

Not based on that description.

Some cash, maybe, co-sign, not a chance.

[vash]

i dont loan or borrow.

i've given my brother money that i immediately filed away as a "gift". i'm so happy all my siblings and siblings-in-laws are plumbed up financially.

[t-tom]

Nope, I've given money to my sisters with expectation (and fully knowing) that it will never be repaid. I'd never sign a mortgage for anyone but myself. That is a serious trip down a really long bad road.

[aschen]

Originally Posted by fastfredracing

T but co signing a mortgage for them would be the single worst financial decision of her life .
We are basically going to give them what we can afford to write off as a loss.
.

You dont need our advice, you got it straight. Give them what you can without risking your well being.


Here is the other thing, why are people with money problems buying a house? There is a reason the bank wont lend them money. Its not like the banks are super conservative about these things.

I am with the boss on this "a man turns his back on his family aint no friend of mine". However you cant be an enabler either. You arnt really helping them if you encourage poor decisions.

[Jim Richards]

Originally Posted by t-tom

Nope, I've given money to my sisters with expectation (and fully knowing) that it will never be repaid. I'd never sign a mortgage for anyone but myself. That is a serious trip down a really long bad road.

^^^I'm in this camp.

[BK911]

Originally Posted by fastfredracing

They are where they are at because of poor choices in life, not because they fell on hard times

Sums it up right there. Don't let their future poor choices effect your life. Give them some cash if you afford too, but no way to a 30 year commitment.

[RF5BPilot]

The only times I lent money to relatives, I assumed I would never see it again (so far, has been true in every case).

The problem for you is that they asked....which makes life complicated for everyone -- both if you do and if you don't.

If this genuinely removes a cushion that you should have for unexpected events, consider lending them a portion of what they want.

If you do and want to think of it as a real loan (not a gift that's unlikely to be paid back), consider getting proper generic loan papers that would put you as someone with a financial interest on the property. The last time I got a loan, the bank wanted to know where the down payment came from. I had to prove that I had the money and that it didn't represent an additional loan from another source -- even family.

One thing to note is that if you do this, it will change your relationship with them, permanently.

[look 171]

Immediately family, not a problem. But then, I only have a sister. If her husband ask, (he will never) that's another story. My folks, no loan. If they ever need money, It will be given to them. Heck, I spent huge amounts on their house remodeling it over the years. Heck, its almost a new house.

co-sign is a big no.

[Dantilla]

Originally Posted by fastfredracing

We are basically going to give them what we can afford to write off as a loss.

This. Key word being "Give". You may present this to them as a loan, as long as you expect to never be repaid.
The advantage being they will be less likely to ask in the future if they still owe you.

[wdfifteen]

Co-signing the mortgage is definitely out.

If you are going to loan them money, have your business execute a formal promissory note. Get it notarized. If they balk at that, say no. If they really intend to pay you back they should have no problem formalizing the transaction. If they don't pay you back, cancel the note, send them a 1099 for it, and claim it as a loss on your business taxes.

[Targa Me]

I've lent money to family. I have always considered it a gift; if I get it back, thats great, but if I don't, it isn't a loss, it's a gift.

Co-sign is another story. If you co-sign, be prepared to make payments yourself just in case they default. If they make a late payment, that goes on your credit report.

I co-signed for a car, for a family member..... for 7 years I had to live with a 30-day late on my report.

[VincentVega]

Good luck Fred. I would help them move, pay for the truck or just about anything else before my name was on a note. They are in this spot for a reason, dont follow them.

[Seahawk]

Don't co-sign under any circumstances: If they need her to co-sign to qualify they should not be buying, period.

Give them what you can afford.

I am so happy, like Vash, that my sisters are solvent citizens.

[Hugh R]

Loan maybe, as others said consider it a gift.

Co-Sign, absolutely not.

I might consider so kind of binding loan to my Son for Him to buy a house.

[Moses]

I loan money to family with the understanding that no more money will be lent until the prior loan is repaid. Would I ever cosign a mortgage? For my kids, yes. For my sister. never.

[LeeH]

Can you afford to buy the house then work up some sort of lease/purchase arrangement with them? If you give/loan them the down payment and they later get foreclosed, the money is likely gone, along with your chance of ever getting it back. If you're the landlord, you can get the associated tax breaks.

[MBAtarga]

As soon as they don't have the funds to make the next months' payment, guess who's going to get a call?

[Evans, Marv]

No! No! No! If anything like others have said, loan them directly whatever you want with the idea of never seeing it again. Level with them about the mortgage by telling them it's one of the things that causes huge disruptions in family relationships when/if things go south.