Mortgage Loan ABC - Lending a Hand: How to Help Family financially but not get taken advantage of

Lending a Hand: How to Help Family financially but not get taken advantage of

It is the nature of family to love and protect each other - but how does that transfer to the financial realm? Is your family obligated to help you with your financial debts? Are you obligated to help a family member who is overwhelmed with mortgage payments or saddled with massive credit card debt? Though the answer to both of these questions is probably no, it is a much more complicated than a simple yes or no answer. You and your family are not obligated to help each other with financial problems, but most people would like to help their loved ones with a crisis if it is within their means to do so.

When you face financial problems, it is probably tempting to turn to family first, rather than face the impersonality of a bank or other lending

institution. But do family and finances really mix? Financial debts to family members can complicate even the best relationships and in extreme situations it can result in nasty arguments and the severing of familial bonds. Some of the most common arguments families have are over money. On the other hand, borrowing money from family and having that security can ease the stress of any financial crisis. If family members have the money you need in their savings account and are willing to lend it to you, then why not pay the interest to them instead of the bank?

Right from the start, you need to be realistic about your financial situation. As the person looking to borrow money, you should ensure that you have cut back on non-essential expenses and have exhausted all the possibilities before approaching family members for money. As the lender, you must also take a close look at your financial situation and make sure you have the money to offer to your family member. If it is not within your means to help them, then you must say so. There is no point both of you going into debt just because you have the desire rather than the means to honor the request for money. It is hard to say no to family, but sometimes it is necessary.

Where most families go wrong with lending to one another is a failure to establish firm guidelines and rules. You need to be very clear from the start whether this is a gift or a loan. If you give money without specifying which it is (a gift or a loan), then the other person may just assume it is a gift. If you need the money back down the road, he or she may not have the means to repay it, because there was no understanding at the start that the money would have to be repaid at some point. Even though you are dealing with your mother or father or your daughter or your son, you still need to treat the arrangement as you bank or lending agency would. You need to write down the amount being lent and the agreement you have made concerning the amount to be paid back and the amount of time that repayment will take. Writing it down will solidify the arrangement and ensure that no one is taken advantage of.

You and your family should agree on a reasonable interest rate and you should also consider arranging monthly payments (as you would with the bank or other lending institution). It is better to pay the money back gradually over time rather than try to gather one lump sum.

If you are the one borrowing money, you need to make sure that they money is used only for the thing it was lent to you for. If you have borrowed money for the down payment of your house, then all of that money needs to be put into the home, not a new pair of shoes or vacation to the Bahamas. Problems arise when family members think that they money they have lent is being misspent or mismanaged.

As you can see, family and finances can mix if you take a few precautions and clearly outline the expectations on both sides. It is worth putting in the extra effort to prevent uncomfortable holiday dinner scenes.

Payday Loans REALLY Make You Pay in the End

Speak the same language Learn the lingo of loans

Case in Point Negotiating Mortgage Points before Signing Anything

Ramifications of Refinancing

Dont take it personally What to do when you are turned down for a loan

Mortgage Loan
◦ 5 Scams - Countdown of the most extreme
◦ A Lending Hand - Only Good Credit Need Apply
◦ A Risky Proposition - How You Score Matters
◦ APR, FICO, HELOC - The FAQ's on these Little Initials and More
◦ Asking the Right Questions before Signing a Loan
◦ Balloon Payments Full of Hot Air?
◦ Case in Point - Negotiating Mortgage Points before Signing Anything
◦ Closing the Deal: Plowing through the Mortgage Paperwork
◦ Crossing that Bridge Loan when you come to it
◦ Don't Come in Second when Shopping for Reasonable Second Mortgage Terms
◦ Don't Lose Your Shirt or Your Home - Keep an eye out for crooked mortgage companies
◦ Don't take it personally-What to do when you are turned down for a loan
◦ FICO: Your Personal Financial Score Card
◦ Friends Don't Let Friends Loan Money:
◦ FYI on PMI - General Information on Private mortgage insurance
◦ Give yourself a little Credit:
◦ Glutton for Punishment? Co-sign a Loan
◦ Go for Broker: A Mortgage Broker Can Pay Off for You
◦ Government Grown Loans - The Lowdown on FHA and VA Loans
◦ Highway robbery - How to avoid getting taken advantage of in the loan process
◦ House Rich and Cash Poor - Buying a home that you can afford
◦ How do you Rate? Credit Reports Tattletale on your Finances
◦ In a Fix: Unsurprising Mortgage Payments you can Count on
◦ Kids in College Can Be a PLUS - Parents, Know your Education Funding Options
◦ Lending a Hand: How to Help Family financially but not get taken advantage of
◦ Lying about loans - Legality of using loan money for something other than its purpose
◦ More house than you need? Shop around before signing
◦ Mortgages Can Be Taxing - What You Should Know about Closing Costs and Fees
◦ On the Road Again: Advice about loans for RVs and other recreational vehicles
◦ One size does not fit all - choosing the right loan for you
◦ Owning vs. Renting - The Big Debate
◦ Pay them off - The advantages of paying
◦ Payday Loans REALLY Make You Pay in the End!
◦ Pre-approved for a loan? Don't get your hopes up
◦ Ramifications of Refinancing
◦ Scam is a Four-Letter Word in the Mortgage Category
◦ Score High and Keep Interest Low - The Ins and Outs of Credit Scoring
◦ Shop 'til the Rates Drop - Looking for a Great Mortgage Interest Rate
◦ Speak the same language - Learn the lingo of loans
◦ Study your Options on Student Loans
◦ Take Note of the fine print on your mortgage papers
◦ The ABC's of Amortization
◦ The Lowdown on Loan Options
◦ The Mystery of Mortgages
◦ The Payoff of Student Loan Consolidation
◦ The Pros and Cons of Consolidation
◦ This Option may not cost you an ARM - Consider your Options with Adjustable Rate Mortgages
◦ Upside Down - Avoid Owing More on your Loan than the Value of your Car
◦ When disaster strikes - Find out your options BEFORE something happens
◦ Buying or Selling, is the Mortgage Your Only Option?
◦ Equity and Your Home, A Hidden Asset?
◦ Fannie Mae and the Home of Your Dreams
◦ Financial Planning and Interest Only Mortgages
◦ Government Approved Mortgage Loans
◦ Home Equity Lines of Credit
◦ How Does Fannie Mae Work?
◦ How Real Estate Drives the Interest Only Mortgage Market
◦ How to Shop for Low, Interest Only Mortgages
◦ Interest Only and Credit Card Debt
◦ Interest Only In Your Best Interest?
◦ Interest Only Mortgage versus Balloon Notes
◦ Interest Only Mortgages: A Risky Real Estate Move?
◦ Interest Only Mortgages and the LIBOR, What is it?
◦ Interest Only Mortgages and the Young Professional
◦ Interest Only Mortgages for the Wealthy Investor
◦ Is the 20% Down Requirement Still Alive?
◦ Is Your Credit Working Against Your Mortgage Options?
◦ Middle America Goes Upscale on Interest Only Options
◦ Mortgage Companies: Specialty Guys
◦ Mortgage Interest and Your Tax Liability
◦ Mortgage Products: The 15 FRM
◦ Mortgage Products: The 15 Year ARM
◦ Mortgage Products: The 20 FRM
◦ Mortgage Products: The 20 Year ARM
◦ Mortgage Products: The 30 FRM
◦ Mortgage Products: The 30 Year ARM
◦ Mortgage Products: The Adjustable Rate Mortgage

A Home Mortgage Loan Calculator Helps you Determine Affordability of a Home