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Our Other Mortgage

April 17th, 2013 at 01:22 pm

I've spent so much time blogging about our formerly "for sale" house, that I've not talked much about our primary residence.

As a reminder, we live in my family's centennial farm house. We completely gutted it, and hired a contractor to finish the inside. We borrowed a total of $70,000 - 30K from my aunt, and 40K from DW's parents.

A year ago January, we began paying them back. We paid a token amount at first - $90 per month to my aunt and $120 per month to my in-laws. Nothing was recorded, nothing was official.

When we started talking with an attorney this past fall about the short sale, he asked about our current housing situation. We explained to him what I just described above. The attorney suggested that we get those mortgages recorded with our county register of deeds. His reasoning was that if our bank did an asset check on us, they would find that (on paper) we owned this house 100%, and they could force us to take out a borrow money against it.

So, we wrote up a couple of mortgages, took them to the register of deeds, paid $20 each, and recorded the mortgages.

The mortgages were amortized over five years, at 2.25% interest. At the time that the mortgages were written (Nov. 2012), 2.25% was about the what the best mortgage rates were, not that we would have qualified for the best mortgage rate. We began making the new payments this past January. So, our (now only) mortgage payments are as follows.

Aunt M. Loan

Original Borrowed - $30,000
Monthly Due - $500
April 1 Balance - $26,164.66

In-Law Loan

Original Borrowed - $40,000
Monthly Due - $650
April 1 Balance - $34,953.06

We plan to have them both paid off Dec. 1, 2017.

For the record, I have no idea if our bank ever did an asset check.

Posted in Uncategorized | 5 Comments »

5 Responses to “Our Other Mortgage”

  1. CB in the City Says:
    April 17th, 2013 at 01:38 pm 1366205891
    1366205891

    I suppose it's good to be on the safe side!

  2. JulieA Says:
    April 17th, 2013 at 03:15 pm 1366211713
    1366211713

    It sounds like you received very good advice from the attorney.

  3. creditcardfree Says:
    April 17th, 2013 at 03:16 pm 1366211776
    1366211776

    Nice to have a plan to pay off your relatives! I'm sure they will appreciate it.

  4. snafu Says:
    April 17th, 2013 at 05:15 pm 1366218903
    1366218903

    So glad it's all registered to avoid an issues with extended family in the future. So impressive that in-laws were able to hand over $ 40K, aunt $ 30K. Are you paying as a traditionally amortized mortgage or as a simple interest loan?

    I hope you will be able to pass it forward and family fund mortgages for your children sometime in the future.

  5. Bob B. Says:
    April 17th, 2013 at 11:25 pm 1366241119
    1366241119

    Yes, traditional amortization. Yes, also looking forward to paying it forward someday.

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