Would you ask this from a close family member? Under what conditions would you do it?

[JustMe]

As I have posted on other threads, I am about to start the process of selling my home and buying a new one. The downpayment for the new house, would come from the sale of my current house, although I do have some savings to use as well. I have looked into what I would need to do to buy first, and can't really come up with a good option; the options I can find end up costing me $9000 (that's long-term, but still a lot to me). All the articles I read say remember to ask family members for loans.

Which brings me to my question. I am thinking of asking my sister for a loan that I could pay back when I sell my house. I have no idea how much money she has that is not tied up anywhere. We are both very responsible with money, but the majority of our savings comes from money our parents left us. I don't know if I want to put her on the spot by asking her this, and I dont even know if its possible (I would not ask her to take the money out of investment accounts, just money she has in savings accounts or similar). I think the risk to her would be if I didnt sell my house quickly. It seems unlikely, but not impossible that it would be more than 3-4 months at the most.

So would you ask this? Would you do it if asked by a close, positive family member who you trusted? I am trying to put myself in the shoes of being asked and it is hard. I think I would if I knew there was a plan to get the money back to me by X date no matter what. FWIW, my sister is single with no kids--so no one else would be involved.

[SnuggleBuggles]

I wouldn't ask. We purposely didn't buy our 2nd house til we sold the first house. I just don't feel comfortable asking people for money. Now, we did live w my inlaws while our house was on the market bc we had relocated.
Eta- only you know your sibling dynamic though. If you can phrase it very clearly that she can say no then it might be worth an ask.

[sariana]

Are you taking out a mortgage? I have heard that getting loans from family (vs a financial institution) can hurt your chances for securing a mortgage. Money that "appears" in your account with no documentation, such as a pay stub or loan papers, sends red flags to the mortgage lender. Check with your lender before pursuing this option.

[khm]

As I have posted on other threads, I am about to start the process of selling my home and buying a new one. The downpayment for the new house, would come from the sale of my current house, although I do have some savings to use as well. I have looked into what I would need to do to buy first, and can't really come up with a good option; the options I can find end up costing me $9000 (that's long-term, but still a lot to me). All the articles I read say remember to ask family members for loans.

Which brings me to my question. I am thinking of asking my sister for a loan that I could pay back when I sell my house. I have no idea how much money she has that is not tied up anywhere. We are both very responsible with money, but the majority of our savings comes from money our parents left us. I don't know if I want to put her on the spot by asking her this, and I dont even know if its possible (I would not ask her to take the money out of investment accounts, just money she has in savings accounts or similar). I think the risk to her would be if I didnt sell my house quickly. It seems unlikely, but not impossible that it would be more than 3-4 months at the most.

So would you ask this? Would you do it if asked by a close, positive family member who you trusted? I am trying to put myself in the shoes of being asked and it is hard. I think I would if I knew there was a plan to get the money back to me by X date no matter what. FWIW, my sister is single with no kids--so no one else would be involved.

In what way does the other alternative cost $9k more? Can you mitigate that difference in an alternate way since it is a long-term difference? I mean, over the course of a mortgage there are a lot of ways to save money well in excess of $9k. (ie, once you do sell, roll the proceeds and re-finance?) Have you talked to a few mortgage people to see what different ideas they might have? Another might have different options if you've only talked to one.

I cannot say what anyone else should do, but I personally would not be able to ask something like that (either with my family or my husband's), and I'd have a hard time if someone asked something like that of me. It just isn't "done" with either my family nor my husband's.

[MMMommy]

No, I probably would not ask. I just wouldn't want to put family in the awkward position of having to say "no". I don't think anyone likes to be asked for money, and it would be difficult and uncomfortable to have to say "no" to a family member. I know lots of people get financial help from family. If money were offered as a loan (unsolicited, like from a parent), I would be more comfortable with that. But I am not comfortable with asking for money. I remember a former co-worker who had a friend that would always borrow money. The co-worker never saw a dime of the money back and told me to just never expect repayment when people ask you for money. She said if you give money, just expect that you may never see that money again. I don't think that is the case in your situation, as I am sure you would pay your sister back.

[westwoodmom04]

PP is right. You have to show where the funds for a down payment are coming from. The bank also looks at a month or two prior bank statements and you need to explain any large deposits other than salary. Some mortgage programs will allow "gifts" but not loans for down payments and they need to be fully disclosed. Add in the complications and bad feelings that can occur when borrowing money from family and I'd pass on borrowing money from family.

I would list your home now and be prepared to find temporary housing until you find a new place. Much easier to sell first, if you don't have the cash reserves to carry two places.

[larig]

I would list your home now and be prepared to find temporary housing until you find a new place. Much easier to sell first, if you don't have the cash reserves to carry two places.

THis.

it also makes you a much more attractive buyer to have no strings--like no "pending sale of current home" to make your offer less attractive. Our friends who are shopping in a VERY hot Seattle market sold their house and are renting back from the buyers through May. They are also expecting this month. It's not ideal, but they just would have had a hard time buying and selling without handling it this way.

[BunnyBee]

You'd have to have a letter from your sister saying the money is a gift, and if it exceeds the federal gift limit, you'll have to pay taxes on it.

Unless I were escaping an unsafe situation, I wouldn't ask a family member. We have taken out bridge loans or moved then rented before buying again.

[basil]

I don't know any of the lending ramifications of doing this, but FWIW when I bought my first condo I cashed out the entire downpayment from some stocks I owned in a lump sum, and no one ever asked for documentation of where the money came from. But this was in 2006 so may be different rules now.

I could see asking my parents to carry a smallish, short-term, extremely low risk loan. I wouldn't ask my brother (because he wouldn't have the money), but I'd lend him the money in a situation like yours.

I think it really really depends on your family dynamics.

[JustMe]

Thanks for the responses. I really don't feel comfortable asking my sister, but was interested in others would say as the articles I read say remember to ask family members. My sister and I are our only living relatives (other than my kids) and I realized I had been thinking that this wasn't an option for me, so I was questioning myself on that.

The $9000 I mentioned would be due to re-financing/changing loans once my house sold. I have only talked to one mortgage broker (the one recommended by my real estate agent, and I trust him), but would be interested in talking to my credit unions, etc, but does anyone know what that means for my credit, if I have multiple credit checks done? Or are they willing to "talk" without a credit check. My credit is great, and the mortgage broker showed me the score when she did the check.

Finding temporary housing would be a problem. First off, there is a shortage here...so if I find anything at all, it would be very expensive. Most also seem not to take pets, and I have 2 cats. I would need to pay to move twice, since I dont really have anyone who could help me with that. Also, long complicated story, but it could effect the kids' school placement as the neighborhoods are relatively small here. It might end up costing me close to $9000 anyway and that would be upfront, as opposed to over the cost of my loan.

I agree it would be ideal if I could sell to someone who is willing to rent it back to me. I discussed that with my real estate agent, and that is the current plan for now...and it actually may work well for someone as this is a great property for a landlord and its a college town, so its possible they might love to have me stay until July or so and then rent it out---but I am not sure when college students start needing their housing. I will ask around about that. thanks!

[HannaAddict]

Absolutely not. No way. We never did and would have never felt comfortable asking. But we have been asked by three family members for $$, and by my BIL and SIL,through SIL, to buy a house. They didn't need it, they vacation etc., but she didn't have the down payment, and her long email made us shake our heads. No way.

This is your responsibility and if the financing doesn't work, then buy a cheaper house or rent if yours sells quickly. But don't ask, especially a sibling. My SIL was pissed we didn't give them $$, and mad when we bought a vacation house. She wanted all the down and fees - and was in la la land about how it works. Even taking money from savings has a big cost to the person who loans it out. I would not be happy to have you ask. If you have to have this house, make a contingent offer and see what happens. Make sure it truly is contingent and have your house ready to list immediately.

[specialp]

I would not ask. Houses are not guaranteed to sell and I would not have the funds to repay two mortgages and a relative's loan if the worst happened.

One thing you need to do is check on is the insurance coverage for a vacant house. Sometimes they have exclusions and will not cover your property after it has been vacant for a certain period of time unless you make changes to your policy.

[speo]

In this situation, I would not ask and I would say no to a loan. I would really only be interested in lending/borrowing under dire circumstances. This situation is not that and there are ways for you to work it so you don't have to borrow money.

[niccig]

I'd never borrow money from family. I've seen how that turns out in extended family. If it's a gift, that's different, but borrowing never ends well. DH had to go freelance, I took our student loan to pay my tuition so we didn't go further into savings as need that buffer. My sister offered to lend me the money, I had already taken out the loan and prefer to pay it back as I am now, rather than owe her. It's less messy this way.

[squimp]

We have done it both ways. In our area, we searched for many years until we finally found the house we wanted. Good houses are in short supplyhere. We took out a short-term loan through our credit union to help toward the down payment so we could sell our previous house. After selling our first house (offer came within a week), we were able to pay it off within a few months and paid very little in interest, perhaps a few hundred dollars. I'm confused about how the loan will cost you $9k. If its interest, a lot of that will be deductible.

For another house we did borrow from both our parents and paid them back quickly, but it was no hardship for them. Even so, I wouldn't want to do it again unless a true emergency.

[squimp]

I also think it really depends on the market. Can you find a house to buy in a short time? Will it be hard to sell your current house? I would try to imagine where you would be if it takes 6 months to sell your house.

[turtle414]

The amount is excessive imo, I would not ask.

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[o_mom]

The $9000 I mentioned would be due to re-financing/changing loans once my house sold. I have only talked to one mortgage broker (the one recommended by my real estate agent, and I trust him), but would be interested in talking to my credit unions, etc, but does anyone know what that means for my credit, if I have multiple credit checks done? Or are they willing to "talk" without a credit check. My credit is great, and the mortgage broker showed me the score when she did the check.



That seems really high for closing costs, etc. Our bank is $500 closing costs on a purchase and $350 on a re-fi. Shop around on that. We also can make a lump-sum payment and re-amortize for no cost.

If they ran a credit report, I believe you are entitled to a copy of it (not 100%), but you should be able to show that to your CU and they can give you ideas on their rates, costs, etc.

[HipMama]

No. Think of how awkward it will be for her,

[crayonblue]

No, I wouldn't. But that is probably because DH and I are on the other end and a family member owes us and is making no effort to repay...Not saying you would do the same but it just has tainted our view of relatives and money forever.

[TwinFoxes]

I wouldn't. Things can go wrong. One of my BILs borrowed money from DH's sister (BIL is married to other sister). Hasn't paid it back, even though the house sold at least 7 years ago. Other BIL wants to wring his neck, especially when borrower BIL starts going off talking about "personal responsibility" during political discussions. I'm so glad we said no when we were asked!

[Pepper]

IIRC once you make a credit inquiry, such as getting approval for a mortgage, any other requests of a similar nature that are made in the next 30 days do not affect your credit score further. In other words, you can essentially shop for a mortgage for 30 days without it affecting your. But if you look at rates every 3 or 4 ,oaths and apply for a mortgage each time, that would have a negative impact.

We refinanced in 2010 with an online company, Aimloan.com. We used them again to refinance last year (just to ,ower our rate again, to take advantage of the great rates at that time) and have been very happy with them. It's an easy online application, would take you about 30 min to fill out & could give you something to compare your current broker with. $9 k out of pocket seems like a lot.

hth

[JustMe]

IIRC once you make a credit inquiry, such as getting approval for a mortgage, any other requests of a similar nature that are made in the next 30 days do not affect your credit score further. In other words, you can essentially shop for a mortgage for 30 days without it affecting your. But if you look at rates every 3 or 4 ,oaths and apply for a mortgage each time, that would have a negative impact.

We refinanced in 2010 with an online company, Aimloan.com. We used them again to refinance last year (just to ,ower our rate again, to take advantage of the great rates at that time) and have been very happy with them. It's an easy online application, would take you about 30 min to fill out & could give you something to compare your current broker with. $9 k out of pocket seems like a lot.

hth

Thanks, good to know! Looks like I am just past my 30 days, though, so wish I'd known sooner.

I have refinanced too, but have heard it is really important to really know who that the person/company you get an original mortgage from can come through in a timely manner. I really don't understand it all, but i have heard about closings getting messed up due to mortgage companies, etc. Does anyone know anything about this? Its that fear that causes me to want to stick with the broker my real estate recommended.

[Pepper]

Whoa, sorry about all the typos in my last reply! I meant 3-4 months, not oaths. Yikes.

I swear I am in no way affiliated with Aimloan...but I was really happy with them, for both refis. The first one we still had a HELOC (a.k.a. DS2!) so they gave us a 45 day closing to allow extra time to subordinate the HELOC. 2nd time around it was paid off so a 30 day closing. I have not made a new purchase using them to finance but my past exp was so good they would be my go-to if I was moving.

[JustMe]

Whoa, sorry about all the typos in my last reply! I meant 3-4 months, not oaths. Yikes.

I swear I am in no way affiliated with Aimloan...but I was really happy with them, for both refis. The first one we still had a HELOC (a.k.a. DS2!) so they gave us a 45 day closing to allow extra time to subordinate the HELOC. 2nd time around it was paid off so a 30 day closing. I have not made a new purchase using them to finance but my past exp was so good they would be my go-to if I was moving.

I;m wondering if its a good idea to do an on-line company for a new purchase? It seems like there is more involved with that and a lot of fear that a mortgage company can mess things up. Any have btdt?

[khm]

I really would recommend you find other mortgage professionals to talk to. Your current person just sounds unhelpful in educating you of your options, or of really HAVING many options to tell you about. I do know this varies from market to market, but selling one home and buying another is common as dirt, they should have alternatives for you that don't cost $9k more.

I LOVED my realtor. I now work for her. We've bought twice with her. She's seriously a great person and a great friend. But, the mortgage person she sent me to was YUCK. We ended up using our old broker that was in our former state. I just didn't like or trust this mortgage person. The fees were high. There is no "kickback" scheme between the mortgage person and my friend, but our opinions / needs / finances are apparently very different.

Can you ask friends and coworkers for recommendations?

We sold our house in one state, turned around and put an offer in on the house we'd fallen for in our new state. We requested our closing date be the one that the buyers wanted for their move-in. We closed on the selling house and the buying house at the same table. As did our sellers, who were also going to another state. It just seems like it works out in our market.

I frequently see the seller "renting" their property back from the buyer for a few weeks if that gives them enough time to close on their property. People really only rent an entirely different place between the sale and the purchase if the new home is under construction. I realize this is a very ideal situation though, our market isn't low on inventory.

[JustMe]

Thank you so much. This is all so helpful.

One burning question I have, though, is that I have heard that mortgage companies/brokers, etc, can really screw things up at closing. Does anyone know anything about this and what to look out for?

[specialp]

Thank you so much. This is all so helpful.

One burning question I have, though, is that I have heard that mortgage companies/brokers, etc, can really screw things up at closing. Does anyone know anything about this and what to look out for?


What types of problems are you reading about? I mean problems do happen at closings from time to time with every company. I think that is the exception. I'm curious what types of screw ups are you hearing about?

[JustMe]

What types of problems are you reading about? I mean problems do happen at closings from time to time with every company. I think that is the exception. I'm curious what types of screw ups are you hearing about?

I am not sure--probably I havent read about them, but have heard about them. Maybe not having whatever it is they are supposed to have ready? Something that holds things up. I

[niccig]

We had to wait forever for a refi to go through, the bank was back logged. Had to redo the appraisal etc, which appraised higher, so it turned out to be in a favor. I don't think that's the case for a sale though, that has to go through more quickly. I do agree with talking with other brokers. We ended up being limited because we didn't have the full 20% equity in house, but the broker we used was able to get us a 90-10 loan which is unheard of now. Other brokers told us we didn't have a chance. This one broker could get us the loan and despite it being painfully slow, it was worth it as ended up saving a lot of money each month.

Like anything, get 2-3 quotes before deciding.

[khalloc]

I borrowed $2500 from my parents when I went to buy my first house. I didnt use the money for the downpayment since I know you need to show where that money is coming from. Instead I had my parents write out checks for my bills, like rent, car payment, student loans, etc...and I used their money to pay my bills for like 2 months, and I just kept my money in the bank.

[lovin2shop]

Yes, I do think it is very common for closings to get mucked up at the last minute. We live in a new development, and I've heard several neighbors have had problems. We came close to delaying ours, and we were with one of the big banks. I have a pretty significant work related relationship with the Private branch of this bank and was able to call in a favor from a high ranking officer to get everything resolved in time to close. Minus that, they definitely would have delayed our closing. So, I think this is a consideration, but it can happen with any lending institution. The only people that I've talked to that didn't have problems were the ones that used our builder's financing arm, but they do not offer the best rates. My advice is to hound the title company and your lender several days in advance so that they have everything ready. I did this to a certain extent, but in hindsight, I should have pushed them a lot harder and not accepted pat answers. You will want to request copies of the all the documents from the title company in advance so that they have to actually look at your file prior to the day before or day of closing.