Hi,
I really feel that it is better to take a loan from a relative because why will a borrower pay closing costs and other junk fees that are charged by the banks and why will he want a bank to earn from him if his relative can earn the same. And I see no reason why you should feel in secured if you lend money to your relative.
Thanks
I really feel that it is better to take a loan from a relative because why will a borrower pay closing costs and other junk fees that are charged by the banks and why will he want a bank to earn from him if his relative can earn the same. And I see no reason why you should feel in secured if you lend money to your relative.
Thanks
Hi Loren,
Welcome to the Forums.
As far as the costs are concerned Norah may be correct but if we consider some other factors then there can be some disadvantages to this kind of a deal.
I think the money that you lend to your relative at 5% can make you earn a lot more somewhere else and especially much more than what he will save from not paying the closing costs. Therefore such a transaction will certainly not help you in making money.
When you lend money to your relative, a lot of risks are involved. But this is not so for the lender because he has different kinds of insurances to protect him from any financial loss.
Finally there can be occasional disputes since you will be involved in a deal with your family member. I have seen lot of families getting disturbed because of lending or borrowing money to or from their members. So its better to avoid such kind of transactions.
For more information you can check from here.
Thanks,
Caron
Welcome to the Forums.
As far as the costs are concerned Norah may be correct but if we consider some other factors then there can be some disadvantages to this kind of a deal.
I think the money that you lend to your relative at 5% can make you earn a lot more somewhere else and especially much more than what he will save from not paying the closing costs. Therefore such a transaction will certainly not help you in making money.
When you lend money to your relative, a lot of risks are involved. But this is not so for the lender because he has different kinds of insurances to protect him from any financial loss.
Finally there can be occasional disputes since you will be involved in a deal with your family member. I have seen lot of families getting disturbed because of lending or borrowing money to or from their members. So its better to avoid such kind of transactions.
For more information you can check from here.
Thanks,
Caron
The disadvantage is that you may not be able to earn some money because the main reason a relative is running to you in the first place is to avoid paying a lender closing fees and interest rates. Furthermore, you might encounter some drama because of what your relative might or might not do including missing payments, not paying in full, etc., which might eventually lead to court hearings and legal disputes. So unless you are sure that your relative will be easy to deal with and is totally true to his or her word, I suggest that you avoid lending him or her money. If you are caught in between and you want to be reassured of your relative's financial capabilities, you can check his or her free credit score which can be a good indication of whether he or she is fulfilling his or her responsibilities.
Yes, you can lend your relative money so they can pay off their mortgage. You'll want to be the first place lienholder on Title if you do it.
