Consider a Family Loan to Finance Your Miami Home

by Isaac Benmergui, Esq on September 10, 2012

With banks wary of loaning money to anyone with less than perfect credit and so few people having perfect credit, many have turned to family and friends to finance the purchase of their Miami home. Europeans have been using this practice for years, as young couples often do not have the down payment necessary to purchase a home and cannot get financing from a bank.

Borrowing money from friends and family has pitfalls that have the potential to cause hard feelings and riffs in the future, but with a little planning and some paperwork, the parties might feel better knowing the transaction has been handled in a business-like manner.

Before the borrower talks about possible financing, he or she needs to know the amount to comfortably borrow. Just as a bank won’t lend more money than it sees the borrower could pay back (at least now with the lending reforms in place), the borrower needs to be responsible and not ask for more than can be comfortably repaid.

The parties should execute a promissory note, starting the terms of the agreement, the amount that was loaned, and the interest rate. A deed of trust should also be signed. The lender should hold a lien on the property, which will protect the investment in case of a default.

The arrangement could be a lucrative investment for the lender as well. The interest rate charges may be more than the rate received on other investments or savings, and the regular monthly payment can provide a nice monthly income.

If you or a loved one is thinking about loaning money to, or getting a loan from, a friend or family member, contact the law offices of Isaac Benmergui. Attorney Benmergui can draw up all the necessary paperwork to give all parties some peace of mind; call 780-800-2510 or email Isaac@benmerguilaw.com for more information or to set up an appointment today.

 

 

 

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