Three's Company Too
February 24, 2011 8:46 AM Subscribe
Need financial/legal info about buying a house with someone else. I know YANML and YANMA but wanted starting points, advice, and any stories from people who have been through this.
posted by anonymous to work & money (5 answers total) 1 user marked this as a favorite
(asked anon due to personal financial details)
A member of my family, not by blood but might as well be, is very elderly and as of just over a year ago a widow. She has no children of her own but kind of adopted me as a surrogate grandchild. She is now in her 90s and her heath is starting to fail. She has no immediate medical problems but it's really not safe for her to live alone any more (she has fallen twice, once with a broken bone and no one to help her, and is having dizzy spells).
My wife and I are thinking of buying a house where she can live with us. She has outright asked us to do this several times as she hates the loneliness in her house (she is unable to drive and thus is mostly homebound and alone most of the time during the work week).
My wife and I have decent jobs, a small house, and quite a bit of credit card debt that we are digging our way out from under. My surrogate grandma owns her house free and clear but it too is a very small house as they had no children.
What we are looking at doing is selling our house, selling her house, using some of the money from our house to pay off the revolving credit (more on this a bit below), and using the combined cash for a really large downpayment on a new, larger house where the 3 of us can live.
We owe about $35k in credit card debt that we'd pay off from the sale of our house to improve our credit score. Sure, it's not recommended to use house equity to pay off credit card debt, we know that, but we are getting raped at almost 30% interest on the credit cards and mortgages are about 5% so it just makes financial sense to do this.
We owe about $130k on our house, which was appraised at about $210k. She owes nothing on her house, which is appraised at about $200k.
We are hoping to keep our mortgage payments in the same ballpark that we are in now, which means borrowing somewhere from $130k to $150k to add to the about $260 we'd have cash from the houses, to allow us to have a house somewhere around $400k.
My wife and I both work full time, I work two side jobs for extra money as well. Our mortgage currently helps us keep our income taxes low through the deduction of interest offered.
My surrogate grandmother has very little in income and does not pay much in income taxes as it is, but she has a large nest egg that is just a hair over $1 million.
So the questions are:
1) What is involved when two adult parties are going in to purchase a house together? Due to tax laws she cannot just sell her house and give us the money, plus her nest egg may keep our interest rates even lower on the mortgage.
2) How should we work the loan and/or the deed so that when she dies if any blood relatives contest the will we are not at risk of losing our house?
3) She has suggested putting in her will that when she dies the mortgage is paid off from her nest egg, which is divided between us and several blood relatives of hers. Again, how should we structure this so that we don't need to pay a lot in inheritance taxes?
4) Should I be consulting an accountant, a lawyer, a financial planner, all of the above?
Thanks in advance. If other info is needed, throwaway e-mail is firstname.lastname@example.org