Posted on: 28th Jan, 2010 10:27 am
how do we set up a low interest refinance through my parents? they are willing and able to pay cash to buy-out our current mortgage, in order to help us lower monthly expenses. what legal and creative ways are there for us to do this? lowest interest rate? longest term? some kind of balloon payment system, or interest only up front?
Hi,
"They are willing and able to pay cash to buy-out our current mortgage, in order to help us lower monthly expenses."
I'm not sure how your parents can "buy-out" your current mortgage. Do they want to make the monthly payments towards your loan and pay it off? If this is what they want, they can refinance the loan at a lower interest rate to pay off the existing mortgage. Interest only mortgages keep your monthly payments lower only for initial few months. Once the interest only period is up, the mortgage payments will also increase. With a balloon mortgage, you will have to either refinance or come up with a large amount of money to pay off the loan after the balloon period is over. Thus, a refinance with a fixed rate mortgage at a low interest rate seems to be the best possible option.
"They are willing and able to pay cash to buy-out our current mortgage, in order to help us lower monthly expenses."
I'm not sure how your parents can "buy-out" your current mortgage. Do they want to make the monthly payments towards your loan and pay it off? If this is what they want, they can refinance the loan at a lower interest rate to pay off the existing mortgage. Interest only mortgages keep your monthly payments lower only for initial few months. Once the interest only period is up, the mortgage payments will also increase. With a balloon mortgage, you will have to either refinance or come up with a large amount of money to pay off the loan after the balloon period is over. Thus, a refinance with a fixed rate mortgage at a low interest rate seems to be the best possible option.
If "buy out" means pay in full, They can hold a private note and you would be paying them on a monthly basis.
it occurs to me that a private note is what is intended here. as for structuring that note, whatever strikes your parents as a reasonable rate of return can be charged on this new loan to them. of course, you, the borrower, would have to agree. recording that new mortgage puts everyone else on notice of what you're doing.
and doing it as a refinance with your parents carrying payment to your original lender(s) directly will keep things clean.
and doing it as a refinance with your parents carrying payment to your original lender(s) directly will keep things clean.
