Shared mortgage

[Curious88]

My husband and I along with his sister and brother-in-law are buying my Mother-in-law a house. The mortgage was for $60,000 and all 4 of us are named on the deed, but I am not on the loan, just my DH, his sister and BIL. The payments are almost $600 and we each pay $300 a month. The house will belong to all 4 of us when she passes and we will decide what to do with it then. (I think they want it in the end for their daughter) My husband hates notes and he sold his classic car and we were thinking of paying off our half early. If we paid $30,000 to the bank and applied it to principal, would that be fair to my SIL and BIL? They will be paying the interest and we won't. They will be paying less interest though, since the balance will be $30,000 and not $60,000. Am I correct in thinking this way? Is this feasible? Just looking for some advice on if this will work. We haven't discussed it with the BIL and SIL yet.

TIA!

[Blessed]

I think it is fair as the amount of interest paid would be greatly reduced. However if for any reason they don't pay you are still on the hook for the mortgage. I would personally talk to them and see what their opinion is and run it by someone more knowledgeable about finance. Is putting that $ down going to hurt you later down the road if you have a big emergency? Is your own residence paid off?

[Curious88]

Thanks for replying! Yes, our home is paid off (he REALLY hates notes ) We will still have some savings, just not as much as we did. He is really stressing about the mortgage.

Yes, I know we will be on the hook, I don't think they would do that to us, but you never know. I guess we just need to talk to them about it. Who knows, maybe they can come up with their 1/2 and then we'll all be happy, especially my DH!

[Petunia 100]

If you pay your 30k, the monthly mortgage payments remain the same. Your BIL and SIL will need to pay the entire $600 per month. Are they willing to do this?

Have you checked into recasting the mortgage? If a recast is allowed, then the monthly payments will be recalculated. Typically, there is a fee to recast the mortgage.

[disneysteve]

If you pay your 30k, the monthly mortgage payments remain the same. Your BIL and SIL will need to pay the entire $600 per month.

Exactly.

This is a horrible arrangement but you're already stuck in it so you need to figure it out.

Can your sister and BIL take out a new loan in their names only if you guys pay off your share of the current loan? Ideally, you want to extricate yourself from this deal as soon as possible. Get your name off of the deed too. The proper way to handle this is for the house to be in your MIL's name and for her will to specify who gets the house upon her death. Putting the house in 3 different people's names is just going to create a mess at some point in the process.

[snafu]

If DH is uncomfortable with a mortgage and owing money, why is he participating in this scheme with his sibling & BIL? There is so much potential for problems in the future. Why are you saying DH & you are buying...when your name is not on the legal documents? How will this be paid if homes again devalue as in 2008? DS points out very serious problems . Have you talked to your lawyer and financial advisor? You may need to take the 'bad guy' role and decline to participate to protect DH and $ 20,000. of your family savings.

[Curious88]

I don't actually consider it a scheme, we are all 4 buying a house together that my MIL lives in. All 4 of our names are on the deed. My name is not on the loan because I didn't want to tie up my credit if I didn't have to. My sister-in-law's husband had to go on the loan because she needed his income.

My DH and his sister were the only 2 out of 7 children that stepped up to help her out. She has a house that is worth only 1/2 as much as the one we are buying. The one we are buying is in a much better location (she's now surrounded by family). She is hoping to sell the old house to help, but it's not selling and now she is letting a family member live in it. We are so happy she is in the new house, she is able to get out and walk and visit. 6 out of 7 of her kids are within walking distance of this house. 3 of us live on the same street. Her old house was on a busy highway and the 18 wheelers that passed by all day would drive her crazy.

When the house is paid off and after she passes, (she could outlive us all, but she is almost 81) we will decide what to do with the house. My SIL has commented that they would like to have it for their daughter so they will probably buy us out.

I really like the idea of recasting if our bank offers that. If my DH is serious about paying our part early I will check into that and talk with SIL and BIL.

Thanks for everyone's advise! I know it's a weird situation, but that's my life. Ha

[disneysteve]

we are all 4 buying a house together that my MIL lives in. All 4 of our names are on the deed.

She is hoping to sell the old house to help, but it's not selling and now she is letting a family member live in it.

When the house is paid off and after she passes, (she could outlive us all, but she is almost 81) we will decide what to do with the house. My SIL has commented that they would like to have it for their daughter so they will probably buy us out.

I wish you a lot of luck. You've gotten yourself into an outrageous mess here. There are endless ways that this could turn really ugly really quickly.

Just a few examples:
What happens when your MIL dies and the family member living in the old house refuses to leave or to pay any of the bills?

What happens when your MIL dies and your SIL moves her daughter into the new house but they refuse to buy you out?

What happens when something in the house breaks and a major repair is needed? Who is going to pay? What if you guys have agreed to split all costs but they aren't able to come up with their share? What if you can't agree on a contractor - they want to use their old friend Bob and you want to use a professional?

My advice is to get out of this arrangement as quickly and cleanly as possible before it implodes.

[dawnwes]

Have you already signed anything?

I agree that this is a horrible idea.