In a nutshell:
It's a loan from friends or family. But, it's no different legally from a conventional mortgage. You sign a loan contract and pay it back with interest in monthly payments, and your lender holds a lien on your property. If you default, even your own mother can foreclose.
- With a Friends and Family Mortgage, re-payment is more flexible, especially when emergencies pop up.
- Due to your close relationship with the lender, there's normally lower interest rates.
- Lenders get a higher return on investment than letting cash just sit there.
- Normally, you can't combine one with a conventional loan -- mainly because banks feel that a Friends and Family loan leads to over-borrowing.
Considering a family down payment loan?
Landed can guide you through a family and friends down payment loan and structure it so family members and friends are protected from IRS scrutiny and other complications that could arise down the road.