sell house to parents as away to lower my interst rate?

[simplychrissy]

In a nutshell, for the past 5 years, I've been working only a little bit to stay home with my two boys. We refinanced a few years ago to consolidate some debt (it seemed like the only option at the time)

We still have quite a bit of equity in the home (about $100,000), but we have a terribly high interest rate (8.5%) I want to return to full time work in about 2 years, but for now I really want to keep my boys out of dayscare so I can be the one to raise them.

We just recently tried to refinance, but were denied becasue we don't have a great credit score and half of our salary comes from my husband's overtime pay which is not guaranteed, so we're a risk to the lenders.

What if we sold our house to our parents and then rented from them for 8-12 months at about $1000 less than we're paying right now, pay off cards, get our credit score back up, and then bought it back from them when we are able to qualify for a nice low interest loan?

We love the house and plan to stay here for a long time. We don't think it would sell easily anyway because it needs some repairs which we can't afford right now and, well, houses just aren't selling in this area right now.

Thoughts on this plan anyone?
Pros and cons?
Benefits to our parents?
Benefits to us?
Thanks for your advice!

[irmanator]

that sounds more expensive because their are charges associated with aquireing a mortgage, and if your only doing it for a year it might be better to get a part time job or cut corners to improve your credit then refinance.

[maat55]

What is your income?
What is your payment?
A list of your monthly expenses would be helpful.

In general, if your parents cannot afford the house without your rent and be able to rent it for the payment, they should not even consider it. Your not only a risk to lenders, you are a risk to your parents, if you do this.

You sound like you are living beyond your means, this is a huge risk for your parents. The fact that you cannot refinance is a signal of trouble.

I agree with Irmanator, you may need to seriously cut your spending and possibly create more income to fix this problem. Or sell and buy cheaper.