Taking over parent's mortgage?

Question

Hey guys, ive been thinking about this a lot and if anyone has experience with parents handing down a house or taking over your parents' house mortgage please advise.

Background: There are 5 people currently in this townhouse and my parents have paid close to half the value so far. ive graduated college debt free and have been working in my field for a year. ive been saving for a down-payment so i can move out into a multi family house and rent one side of it.

my father and i had dinner and i threw the idea of taking over his payments so i can build up equity and he can get the house he really wants (ranch style with a pool). When we go sell house number 1 we would split the profit 50/50. The only thing he requires right now is that i pay a large down-payment towards house number 2. all 4 of them would go live in this new house and i would rent house 1 to some working professionals i know are going to be relocated later this year.

Anyway it seems hard to conceptualize this logistically so if this is advisable please offer any guidance. the other option was just to continue to save like normal and he will rent this house to strangers so we all have to make moves this year regardless of the decision i just figured i keep the house and start building equity.

Thanks in advance

Christian Florez-Santiesteban · Answer

So siblings are turning 18 and will go off to college and whatnot. i like the idea of buying it outright from him. Im definitely not getting an amazing deal or anything just the certainty of the upkeep, remodeled bathrooms and familiarity rather than try to hunt a multi family house in another town. The rent would be higher as well. if i do buy it from him would i lose the really low interest rate and mortgage payments that he has ? the mortgage is about $1100 and rent in the area is $2.6k minimum.

Mark Bookhagen · Answer

Yikes... lots going on here. If you have siblings, I wouldn't do this unless you get the property into your name. Why not just buy it from your parents and they can use the money for whatever they want? - The word "profit" needs to be defined, as it can mean many different things depending on your point of view in this case.

- Does the down-payment on #2 equate to the equity he's giving you? How can you be sure?