Family Loans Make Sense for Home Buyers
Wednesday, January 7th, 2009
photo credit: Mike Licht, NotionsCapital.com
Bob Hope once said, “A bank is a place that will lend you money if you can prove that you don’t need it.” Maybe that explains why more and more home buyers are turning to their loved ones, and even more distant members of their circle, for help with financing. If done right, tapping the “Bank of Family and Friends” can be financially lucrative for both you and the person lending you the money. You get the cash you need, they earn interest at a rate equal to or even higher than they could have gotten elsewhere—everyone wins.
Commonly called a private home loan, a private mortgage or an intrafamily mortgage—even though your private lender can be someone other than a family member—these types of loans are legally speaking no different than a mortgage originated by a bank, credit union, or other institutional lender. (more…)