Buying Out A Family Member - Please Help
I have a question for all the pros out there.
My mother and aunt share ownership in my grandmother's house with another distant relative. Interestingly enough, my grandmother has no ownserhip of her own house. Anyway, my mother and aunt want to buy out the other distant relative.
The house in located on Long Island, NY. It is fully paid off, and at last assessment in 2003 was worth approx. 400k. The distant relative is asking for 100k to buy him out.
The question is this... what is the most cost effective way for my mom and my aunt to buy this?
Should they get a traditional loan, a new mortgage, or since they are already on the deed, is this a situation where it would actually be a refinance?
Any creative ideas out there?
A traditional loan will be the cheapest way out of it. If you are going to do any rehabbing of the property now would be the time to do it as well. If they can afford the mortgage, add a pool or get better insulation, new windows, carpet, etc.
I would also pull the credit of the remaining people that are going to be on the mortgage, and clear it up to get a better rate. Since it is family I would make it as pleasant experience as possible to avoid any future rifts. You may also want to help the person getting the 100K by offering to put it into a fund, to avoid paying income taxes.
Good Luck,
Kyle
thanks for the note.
What types of funds could shield the money from taxes, and can the sellers draw money from the fund when they need?