Financing a Mortgage by a Family Member

Real Estate Sales Representative with First Weber Group Realtors

Clients of mine were contacted by their parents to determine if they would be interested in working out an arrangement for their parents to carry the first mortgage on their home.  The parents are retirement age and felt that they would like to minimize their risk in the stock market by investing in more secure products.  They found that bonds and certificates of deposit failed to pay a return that would work for them.  My Clients agreed to allow their parents to hold the mortgage.  The parents became the Mortgagee and their Children became the Mortgagor.  At an interest rate of 5% on a $120,000 mortgage, amortized over 30 years, the first payment to the parents would be allocated as $500.00 in interest and $144.19 in principal.  A nice win-win arrangement as the parents received an acceptable rate of return and their Children were given a better interest rate than what they were offered on the open market.  Please stay tuned for instructions on how to simply and securely make this arrangement.       

Comments (7)

Sergio Rebollo Jr.
Real Estate TeamMates - Miami, FL

Rik.....Welcome to ActiveRain.  This is a great community to network with others as well a great place to learn from other's experiences and knowledge.  I've enjoyed it; I hope you enjoy it as well.

Sergio Rebollo Jr.
Exit Prime Realty
Coral Gables, FL  33134

Miami Short Sale Specialist - Profile

Jan 15, 2009 12:40 PM
Maria Tascon
Keller Williams Realty Spartanburg - Moore, SC
Spartanburg SC Short Sale Specialist


Welcome to Active Rain.  This is a great community and you can learn a lot as well as share your thoughts.  Enjoy it!

Jan 15, 2009 02:13 PM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello Rick,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to you!


Jan 15, 2009 02:40 PM
Todd Clark
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

I agree it can be a win-win, but when it comes to family members and loans I have seen it back fire way to often. I specialize in owner financing and lease options and I refuse to get involved when the deal is between two family members.

But, I would love to read how you safeguard both parties. Welcome to the rain and I suggest you join the creative financing group as we discuss things like this all the time.

Todd Clark, Helping Families Home -

Jan 15, 2009 05:17 PM
Sandy Childs
Keller Williams Realty - Spartanburg, SC
Realtor - Spartanburg, SC

Congratulations on joining Active Rain. This is a great professional networking and referral site. Our Team is working here in the Spartanburg / Greenville areas of South Carolina. We would be thrilled for any referrals you might send our way - or any referrals that we could send to you. Hope you enjoy this site as much as I do.

Jan 16, 2009 11:43 AM
Jean Terry
Keller Williams Realty Spartanburg, S.C. - Spartanburg, SC

Hi anwelcome to Active Rain, a great site to network, share, learn, and have fun. Good Luck.

Jan 16, 2009 11:59 AM
Vicente A. Martinez
Prudential Douglas Elliman Licensed Real Estate Salesperson - Woodhaven, NY
Realtor, Brooklyn - Long Island - Queens Homes

Hi Rick and welcome to active|rain.

I'm sure that they have plenty of referrals for you. I look forward to checking out your future posts. 

There are thousands of tips, tools, and tricks of the trade here. Be sure to check them out. Best of luck and see you around.

Friend me on Facebook 

Follow me on Twitter

Jan 16, 2009 03:54 PM