Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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Leftover40oz
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Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by Leftover40oz »

Hi thank you for taking the time to try and help!

I'm 25 and I've owned my home for almost 2 years but now I'm moving into my wife's grandfathers home.

This is a great switch for me for a few reasons


>My 2700 mortgage + all utilities becomes
2000 + split utilities at the new house

>Wife's grandfather has paid 15 years into the mortgage with an extra payment here and there so I assume now almost all his payments are going to the principal.
^^^our agreement is that I pay the mortgage which is currently at around 2000....and my payments lower through the years because now every payments going to the principal.

>It's a multi family home and his space is sectioned off to his own side of the house

>and when the day comes that her grandfather passes, it's willed to us of course


So my big Indecision here is what to do with my debt free self. I'm saying goodbye to nice tax returns from my interest from the house I owned because now I'm basically renting in a relatives home.

I'm seeking some help from older/experienced people on what are some good options for someone in my position

I make around 70-80k a year, excellent credit, no debt, union job with pension/annuity. about 50k saved.

I'm 25 and it seems like I'll Own a paid off 500,000 dollar house from my wives grandfather by the time I'm 40 :) which also has his apartment side of the house which will eventually be able to be rented out (rest his soul). so for the right now I'm gonna be saving an extra 1000-1200 dollars a month in the new house. And since I'm young I want to make the best of my situation with investments.

I've tossed around the idea of buying a condo apartment to rent out and put the minimum down on it....plan would be to benifit on my tax returns from the interest of the rental(not too much but it's something) and once most of the interest is paid off I would pay off the principal fast to enjoy the profit of the rental.

really I'm just looking for some help on how I can benefit from being mortgage free with a clear name.
Spudd
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by Spudd »

You must be American since you mention benefiting on taxes from your old mortgage. I recommend bogleheads.org for more American advice, this is a Canadian forum.

If it were me, I'd invest in retirement accounts.
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Norbert Schlenker
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by Norbert Schlenker »

What Spudd said and ...
Leftover40oz wrote:I assume now almost all his payments are going to the principal.
That's not the way mortgages usually work. It's almost certainly still blended interest and principal. If the mortgage originally had a 30 year term, payments are still around 60% interest. From the sounds of it, Grandpa's keeping the mortgage so the interest deduction remains his for tax purposes.

You've assumed payment on the mortgage, putting $2000/month in Grandpa's pocket. He also keeps the tax benefit (assuming you're in the US) of about $15000 in mortgage interest and who knows how much property tax every year. A rough guess is that he's $30-35k better off every year.

With the disappearance of the mortgage on your own house, your mortgage interest deduction disappears, so your estimate of $1000-1200/month extra is probably a little high. You get to live rent free, but the net to your pocket is perhaps $6-8k each year.
and when the day comes that her grandfather passes, it's willed to us of course
Whoa, whoa, WHOA!!!!

What if Grandpa changes his will???
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Leftover40oz
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by Leftover40oz »

Thanks for the replies....I'm no expert but i do know the banks are getting their money back fast and getting most interest in the beginning of the mortgage....but yes your right he's still doing very well having a rental.


And yes him removing my name from the deed if me and his little girl divorce is a very real issue to consider also....

Even more reason for me to try and own something on my own so I don't end up wasting years and not paying into anything if things go south.


Thanks for the replies fellas....I always liked canadians! Back when I did scummy phone sales I knew Americans were a possible sell and I wouldnt have a chance with Canadians....they'd ask all the questions I didn't want asked....."and after u take my credit card for the price of shipping your gonna keep on trying to charge my card every month won't ya? Eh" ha
hamor
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by hamor »

Good to see Norbert posting :)
Whoa, whoa, WHOA!!!!

What if Grandpa changes his will???
I second that, old people change their minds quite often. I'd make sure it's all legally binding.
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by kombat »

Leftover40oz wrote:And yes him removing my name from the deed if me and his little girl divorce is a very real issue to consider also....
Or if he remarries, or if he has a falling out with his granddaughter (your wife), or if he runs out of money and needs to sell or reverse mortgage, or he gets scammed, or.. or ... or ...

Sounds like a risky deal to me.
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AltaRed
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by AltaRed »

I agree. It is a dangerous affair to assume family situations will remain as they are.....in any family. I don't do business with family and any kind of financial interface that I do have (one joint account) is backed up by written contract.
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Re: Moving back in with a relative;MORTGAGE FREE ADVICE NEEDED

Post by BRIAN5000 »

AltaRed wrote:I agree. It is a dangerous affair to assume family situations will remain as they are.....in any family. I don't do business with family and any kind of financial interface that I do have (one joint account) is backed up by written contract.
I also have a written contract with my wife if I buy her a winning Lotto ticket and vice versa I get 40%. :roll: , nine million last night I better go check my ticket.
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