Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Borrowing money on Inherited house?
Old 03-30-2020, 08:39 PM   #1
Recycles dryer sheets
 
Join Date: Mar 2015
Location: Somewhereville
Posts: 456
Borrowing money on Inherited house?

Unfortunately we lost both our parents in the last 6 months. We 4 siblings inherited equal shares in the family home. Its in the SF Bay Area so the value pretty high and none of us can afford to buy the others out. So we had decided to go ahead and sell it. Everything has been delayed due to the Corona virus. At this point probably wont put the house on the market till later this year or early next year. The house was moved to a trust in our names. We have been discussing taking a small loan of around 125000 out to distribute and build up everyone's emergency funds during these scary times. We would leave 25000 or so to pay the loan till the house is sold. We're wondering best way to go about it? Any suggestions?
2HOTinPHX is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-30-2020, 10:12 PM   #2
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 485
Quote:
Originally Posted by JDPascale View Post
Unfortunately we lost both our parents in the last 6 months. We 4 siblings inherited equal shares in the family home. Its in the SF Bay Area so the value pretty high and none of us can afford to buy the others out. So we had decided to go ahead and sell it. Everything has been delayed due to the Corona virus. At this point probably wont put the house on the market till later this year or early next year. The house was moved to a trust in our names. We have been discussing taking a small loan of around 125000 out to distribute and build up everyone's emergency funds during these scary times. We would leave 25000 or so to pay the loan till the house is sold. We're wondering best way to go about it? Any suggestions?
Sorry for your loss.

IMO the loan is a bad idea. What if the house takes longer to sell and the $25,000 earmarked for loan repayment runs out? Will each of the siblings then agree to pony up 1/4 of the repayment at that point? What if one of them refuses/can't pay for whatever reason? What if the remaining siblings can't cover for that person and the loan becomes delinquent? That could create resentment and conflicts among the siblings. How urgently is the $25k needed for emergency fund and is that relatively small amount worth all these risks?

Each person's situation/risk tolerance is different, of course, but my rule is: I never get involved in money matters with family or friends. I don't borrow from them, I don't loan them money, and I would never co-sign a loan for or with other people where I have to depend on them to fulfill their financial obligations, and if they don't, I could potentially on the hook. One could easily end up not only losing money but destroying relationships. To me, it's just not worth the risk.

Lucky Dude
luckydude is offline   Reply With Quote
Old 03-30-2020, 10:37 PM   #3
Recycles dryer sheets
 
Join Date: Mar 2015
Location: Somewhereville
Posts: 456
Thank you very much for your reply. I tend to look at things with rosey colored glasses. I didn't even think of all those things that could go wrong. Especially with family...LOL. You are so right on....again thank you!!!!
2HOTinPHX is offline   Reply With Quote
Old 03-30-2020, 11:59 PM   #4
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 4,892
Quote:
Originally Posted by luckydude View Post
Sorry for your loss.

IMO the loan is a bad idea. What if the house takes longer to sell and the $25,000 earmarked for loan repayment runs out? Will each of the siblings then agree to pony up 1/4 of the repayment at that point? What if one of them refuses/can't pay for whatever reason? What if the remaining siblings can't cover for that person and the loan becomes delinquent? That could create resentment and conflicts among the siblings. How urgently is the $25k needed for emergency fund and is that relatively small amount worth all these risks?

Each person's situation/risk tolerance is different, of course, but my rule is: I never get involved in money matters with family or friends. I don't borrow from them, I don't loan them money, and I would never co-sign a loan for or with other people where I have to depend on them to fulfill their financial obligations, and if they don't, I could potentially on the hook. One could easily end up not only losing money but destroying relationships. To me, it's just not worth the risk.

Lucky Dude

+1. What he said!

Better to look at ones income and expenses and figure out how to increase income and/or reduce expenses to build up emergency funds than taking out a loan on a situation where so many things could go wrong and create issues among your siblings.

My siblings and I were in a similar situation when our mother died in 2014. Though we stood to make a large profit on the house (even when divided 7 ways), we took our time and did not put the house on the market for 3 years. We all contributed to any maintenance it needed (relatively little) during that time - spread among 7 folks it had very low impact.

IMHO better to be patient than to deal with the loan and the entanglements that could bring along.
__________________
FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
jollystomper is offline   Reply With Quote
Old 03-31-2020, 05:35 AM   #5
Recycles dryer sheets
 
Join Date: Mar 2015
Location: Somewhereville
Posts: 456
Thanks for the input and sharing your story. We all have ok emergency funds in place. I think I am in super sensitive panic mode with Corona virus happening (actually had a case reported in our office here in Phoenix Sunday night. Thankfully I work from home most of the time) and thinking everyone would love to have even more money in the bank in case of job losses as things get worse. But some siblings seem to think they will be OK no matter what.
2HOTinPHX is offline   Reply With Quote
Old 03-31-2020, 09:55 AM   #6
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 780
You probably still can sell it now even with the coronavirus/shutdown going on. I live in the Bay Area and I've seen multiple houses in my neighborhood go on the market, go pending and close over the last month. Most of them go pending in about 1 week.
jkern is offline   Reply With Quote
Old 03-31-2020, 09:57 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 8,875
I think you would have a tough time finding a lender for such a small amount, short term. Also, liability is almost certainly to be "joint and several" which means that in a default they will only go after the sibling who looks like he/she has the most assets.
OldShooter is offline   Reply With Quote
Old 03-31-2020, 10:42 AM   #8
Recycles dryer sheets
 
Join Date: Mar 2015
Location: Somewhereville
Posts: 456
Quote:
Originally Posted by jkern View Post
You probably still can sell it now even with the coronavirus/shutdown going on. I live in the Bay Area and I've seen multiple houses in my neighborhood go on the market, go pending and close over the last month. Most of them go pending in about 1 week.
Thanks for the reply. Unfortunately we still have thru sort thru Parents belongings...we planned to do that earlier this month but two us had to cancel travel plans from Phoenix dues to corona virus concerns. We are luck to have one sibling who has been living in home for a few years with parents so the house is not sitting vacant.
2HOTinPHX is offline   Reply With Quote
Old 03-31-2020, 10:43 AM   #9
Recycles dryer sheets
 
Join Date: Mar 2015
Location: Somewhereville
Posts: 456
Quote:
Originally Posted by OldShooter View Post
I think you would have a tough time finding a lender for such a small amount, short term. Also, liability is almost certainly to be "joint and several" which means that in a default they will only go after the sibling who looks like he/she has the most assets.
Thank for the info...we are going to give up on the loan idea. Sounds like it would complicate our lives more than help.
2HOTinPHX is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Borrowing money from a friend or relative redduck FIRE and Money 107 03-24-2018 11:48 PM
borrowing from ira lazygood4nothinbum FIRE and Money 45 02-28-2007 06:33 AM
Borrowing, Spending, Counterfeiting Editorial Mountain_Mike FIRE and Money 5 08-24-2005 12:28 AM
Borrowing money during retirement. proud_texan FIRE and Money 2 09-11-2003 05:05 PM
Borrowing from 401K vjmed1 Other topics 11 09-07-2003 02:49 PM

» Quick Links

 
All times are GMT -6. The time now is 06:41 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.