Lending money to family...

[sixone]

That is possible...although I am against giving money as a gift in principle unless it is for something life saving/life changing, as in to help someone out who is in need, not because they want something nice that they cannot afford.

I will suggest they find investment property.

I'm right there with you in that philosophy, but you've married a woman who doesn't share your philosophy. Give them a gift and have it over with - don't get yourself on the hook as an owner or co-signer in property you aren't prepared to take full responsibility for.

Your SIL has made it clear that she does not intend to be financially responsible or independent. That's her deal, don't make it yours.

 

[NoCreativity]

Glad you found your way out OP. I know you said they are pretty decent with finances but I wouldn't be so sure about that. Buying any house(whether $100k or $300K) with only $4K in the bank is a huge mistake.

OP,

My experience is that, with few exceptions, family loans are very risky and often turn out bad.

I loaned my sister a couple k one time, she was laid off and bills were piling up. I didn't expect the money back but I knew she would find a way to pay it. Once she got a new job I got a check once a month until the debt was paid. She would never dream about asking for money for the purpose of OP, which is why I trust her.

 

[busydude]

my mom just lent her brother pretty much our entire savings so they could buy a house, sell theirs, and pay us back with what they make off their old house. no, I was not happy.

My dad gave his 4 brothers a loan of $100K. This was 10 years ago.. he never got a single penny back.

 

[OlafSicky]

DON"T do it I'm speaking from personal experience. You won't see the money and if you ask for it you will be the bad guy.

 

[DaWhim]

DON"T do it I'm speaking from personal experience. You won't see the money and if you ask for it you will be the bad guy.

more like he will lost it both, the money and the sister.

 

[PingSpike]

I read all your replies. If you "loan" that money to them, its fucking gone. So its a gift if you do it. It doesn't matter what they say or what mortgage fraud plans they come up with. Only give them the money if you are at peace with never seeing it again. Don't fool yourself into thinking its coming back, that will just make you mad and them mad when they don't. Because they won't be paying it back.

That said, I have no idea why they are so house crazy. By your own description their credit is crappy, they have no assets and their income is not impressive. Also by your own admission they will in a couple years likely have much better income, their credit may well have improved and they have two years to build up some savings. And your sister in law is 21. 21! Why does she think she should have a 280K house right now anyway? Whats the big hurry? In two years she'll be the ripe old age of 23 which is still pretty damn young to be owning a $280K house. I see no reason to pity her, its not like she's getting thrown out on the street. And if she wanted a house right now she should have married one of the plethora of 33 year old men that are better established instead.

Its also pretty hard to lend money to some one with no money so they can live in a better house than you own. Didn't you say you were looking for a more affordable house for you and your wife?

Frankly, I'd be rather annoyed I was even asked this. Its not like its for a lung transplant or something.

 

[OVerLoRDI]

No. Don't do it.

 

[dave_the_nerd]

never. never. nevernevernevernevernevernevernevernevernevernevernever.

Gifts are cool. Loans are for banks.

 

[highland145]

^^^Lend to them at 35% like I would.

no. they should live in a crappy apartment or trailer like we all did when we first got married

QFT.

He has no savings at 33? Hell, you should catch the next flight to escape them.

 

[Elbryn]

when i was 31 i had 0.00 in my 401K.

the air force did not offer one and my first employer did not offer one either.

i thought military could do TSP or something like that?

 

[Elbryn]

That is possible...although I am against giving money as a gift in principle unless it is for something life saving/life changing, as in to help someone out who is in need, not because they want something nice that they cannot afford.

I will suggest they find investment property.

i'm not sure if investment is what they would consider fitting. you and your wife were fine with dealing with the sweat equity involved with an investment property. are they? though i do consider a property for investment a different case than one to live in. on one hand you're trying to make money, on the other, you're spending it. plenty of investment properties fail too, but at least the goals should be clear.

the good news is if they fit the investment property mentality, they've got a resource that's been through it before to ask questions of and learn.

 

[Fritzo]

I borrowed some money from my parents to pay off some medical bills some time back. To avoid problems, I treated it just like a regular loan. I made a contract, put payment schedules, interest, and a payoff day on it, plus agreed upon penalties for late payments, then had it notarized. Worked well and I'll have them payed back 100% this year.

 

[SpatiallyAware]

I've known her since she was 12 and we are very close. I feel like either way I go damage will be done. Why the fuck do people need to ask others for money? I guess my question is, how do I go about letting them down?

She has never once asked me for money and knows how I feel about it. I'm thinking this is her fiance. The bitch of it is, they know my wife and I are backing a new business venture and currently have a lot of cash tied up.

Does the bank look for these types of things when lending? Aren't they going to pull a bank statement and see that their account went from $4K to $20K overnight and wonder how that happened?

My family member 'policy' is this... I don't loan money period. I will help you out only once, so this had better be that one time you really need it.

Yes, their bank will know this was a gift, and won't count it towards what she could pay for the loan.


I'm surprised she got approved.

 

[GotIssues]

OP, you seem to have a good head on your shoulders and know what the answer is, and you have a way out with the mortgage fraud. I would leave it at that.

It's obvious that you want to help them out because you are a nice guy, but sometimes the best way to help someone out isn't by giving them what they want, it's by telling them to get it themselves. You know the right answer is to stay out of it completely, listen to your gut.

 

[Schfifty Five]

At 21, she shouldn't even be getting married. I seriously doubt she knows what she wants in life yet (except maybe for that $280K house lol).

 

[gooseman]

And when they get divorced in 3 years, you are screwed.

Do not loan large amount of money to family! Especially newlyweds.


WTF! Tell her to wait until she has a stable career for at least a year before they buy a house.
She is immature and greedy.

DO NOT SUPPORT HER.

BTW, their marriage will fail. The age differential and him having a kid = failure.

I would somewhat believe most of this post to be true. #1 it is obvious they cannot afford this house. #2 marriage is a tough business. What are the statistics? 50% of them fail? In my opinion hers has less chance than that of remaining solid because she is too young to get married and the age difference. Once that divorce is final, even if there was the smallest chance they would ever pay it back before, that chance is gone now. #3 don't go for the buying their car option. Odds are by the time they got ready to buy it back from you, assuming the car is still around by then, it would not be worth enough for them to get a loan large enough to cover what they borrowed.

Like everyone else here has said, if you can't afford or just don't want to give them the money then don't do it. You will likely never see it again. They should have never put you in this situation unless it was money for something "life saving".

 

[PowerEngineer]

My wife's sister ...

OP, maybe someone already asked this, but what does your wife think?

 

[Bignate603]

Here's a big question. Even if you give them this money for the downpayment are they going to even be able to afford to keep the house? If they get a 4% mortgage rate that's a bit over $1200 per month. They still have to pay PMI because they didn't put enough down, home insurance, taxes, and then all the upkeep and utilities they'll need for a larger house. They're looking at $2k a month just to keep their heads above water, and then they want to finance the car on top of that.

Unless their income is noticeably above average for most people starting their careers they're not going to be able to realistically afford that home.

 

[arcenite]

I wouldn't even think about it... but then again, I'm a prick.

 

[GrumpyMan]

If you give them the money then consider it a gift, because you'll never see a penny of it. Your future family get togethers will be very awkward. Once they get married, they will need new furniture, fix things, one of them might lose a job, new babies to pay for...it will never end and neither will the excuses. If anything, you buy the house and rent to own it to them, have them give you all the money they have saved up and see how they like this new plan. Good luck.

 

[Engineer]

Run. Away. Now.

Don't walk.

Run.

X infinity!

 

[Doppel]

If they are struggling on a down payment, then they're not ready for a house. Once they get a house, they will be hit by multiple costs: utilities, repairs, tax, etc, etc, etc. They might not be able to meet the payments for your loan. If you're going to do it, consider your money a gift.

this

 

[edro]

Loan them the money.

They deserve it. They work hard and deserve a nice house.

You are a prick for even questioning it.

Blood is thicker than... money?