Rolleen asked:


My daughter and son-in-law and two small children moved to the US from Italy and have been living with my husband and me for the past 7 months. They want to buy a house, have $75,000 in cash to put down and I recently took out a second mortgage (fixed 15 year 6% home equity loan) for $160,000 to loan to them interest free so they can buy a house with cash for $235,000. But my husband and others are telling me it may get complicated with the IRS, etc.

We planned to have papers drawn up, like a promissory note, saying that they would make the monthly payments on the $160,000 loan that is under my name. And if they should die or move before the loan is paid off, the money from the sale of the house would go to pay off the $160,000 loan. Do I need to charge interest for them? They are actually going to be paying off the loan that is under my name and already has 6% interest being paid. Is the fact that it is over $100,000 going to be a problem with the IRS and interest-free loan’s to family? It’s not a gift because they are paying it off.

It’s all very confusing and I don’t want to get stuck with a big gift tax or imaginary interest tax or worse yet, get in trouble. Do I need a lawyer or can we just get a Quicken Lawyer software Promissory note and be okay? I trust my daughter and son-in-law to pay this loan that’s in my name. It’s just been hard for them to get a loan right now because of the requirements for 2 years residency, 2 years at one job and 2 years credit in US. Price of houses are down and I want them to be able to buy one now.

TYRONE

Chris G asked:


I had a business failure that caused a personal chapter 7 bankruptcy which was discharged in April of 2007. I currently have a tax lien on the home due to some IRS penalties, interest and taxes owed from the business. I’d like to get a home equity loan to pay off this debt as well as a credit card.

Our current mortgage is at 229,000.00 and the home is valued at approximately 380,000.00 and might be worth more. I need to get 75,000.00 to pay off all debts. I qualify for an FHA mortgage, but due to county limits I can only receive 281,250.00 which still leaves me 35,000 short of paying everything off.

Should I get the FHA mortgage and try to find a small home equity loan, or is there anyone that can deal with a larger home equity loan to pay this off. My credit scores rank between 637 and 661, my wife is between 682 and 704. I currently have a great job that I’ve had for 4 years and make over 80,000.00/year.

Please help.

Thanks.

CLEO

rubie00 asked:


When my house was worth something a few years ago I paid of an existing mortgage with a 30year fixed home equity loan. I also took out a small home equity loan for improvements. I had a ton of equity but now i don’t. House has been on market for 3 years since getting divorced and no offers. I have it priced well below what i owe but still cant lower it enough(don’t have enough money to pay the difference) My ex-husband lost his job so he’s unable to pay his portion on the vacant house. Can I do a deed in lieu of foreclosure on home equity loans? Is there a way to prevent oweing after foreclosure?
1) if it’s a first lien on the property by virtue of paying off the original mortgage, yes it can.
yes it is first lien

(2) Deed in lieu would be up to your lender; and you might still owe the difference between sale price and fees and what you owe.
which is why i’m giving my house back because i can’t come up with the difference of what i owe, what the house is worth and what i can sell it for. I owe 203k and its listed for 170k which after commission and fees i would need 40k to pay off loan. However, that would be that i actually got an offer. For the house to sale it needs to be listed around 159k

CLAIR

OP-lo asked:


I currently have a stash of cash in a money market earning 3.61% APY. I also have a home improvement project set to start later this month. I have enough cash to cover about 40% of the project. I also have a line of credit locked to prime, currently 5.25%. Should I take some of the cash to max out my Roth IRA and thus borrow that much more against the house assuming investments will earn 8% over time - or - should I minimize my home equity debt in the short term. My job situation is good but not great. I am also putting away 5% of my paycheck monthly into a Roth 401K. I have also considered the fact that I could refinance the equity loan into a new 30 yr mortgage after the project. The downside there is that I am currently at 5.25% 5 years in to a 30 yr mortgage. Thanks for your input.
FYI - even if I used 100% of my equity line, I would still have over 100K in equity on my home. I live just west of Chicago. Our housing market here has slowed but notthing like the devaluations of Florida or the west coast.

JARVIS