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Feeling like the only voice of reason...
Ok, for some back story to start with - I'm married a little over a year now, we are living on our own, I'm working FT my husband is job searching after the 9/11 GI-Bill changed and our situation needed to change too. We live in Northern NJ about 10 miles outside of NYC, so cost-of-living is quite high.
My MIL/FIL are having serious money issues. I'm starting to resent them because it is draging myself, my DH and BIL into the mix now too - we are all under 30 and just starting out in our professional lives. They purchased their current home in the early 80's and have lived there ever since - the family homestead.
I feel like I'm tweezing out details from my DH bit by bit because neither he nor his brother have the full scope of what their parents situation is. What I have learned so far is that they had borrowed against the value of the house at least once, maybe twice to finance 2 business ventures that never made it off the ground.
I am imagining that the mortgage $ amount alone is well over 300k at this point, considering the amount they would have borrowed - but nobody has had the balls to ask what the total amout actually is yet. Taxes on their property are about 10k a year, tacking on almost another grand onto whatever the mystery payment is every month.
My FIL's retirement package took a hit when the stock market tanked a few years ago - my MIL hasn't worked for a paying wage since she was married and was pregnant with my DH (the eldest of 3 - which is another story...) FIL has been subbing at the local high school but because of budget cuts, his 'potential' hours are being cut also. SO, their income isn't able to support the mortgage/loan payments and taxes.
The plan that my DH and his brother have been coming up with is for one or both of them to purchase the house from their parents, so that they are responsible for the morgage and taxes and their parents would then be on the hook for utilities, repairs/maintenance, etc. Now, I have a degree in business management and some limited financial-dealings knowledge. I don't see how this plan would ever work for anyone involved and I'm starting to also feel betrayed by my husband because he's working this out with his brother and forgetting that OUR credit is now also connected...
There is no way that my MIL/FIL can sell the house to their son without them still being on the hook for the remainder of the mortgage after the sale. A short-sale would mean that nobody in the family would be able to retain ownership of the property (the current owners/sellers cannot have any previous connection to the purchasing party). A foreclosure would mean just about the same thing...
The house, had it been well-kept and updated in the last 30 years could probably fetch about 325k or +350k in today's market. HOWEVER - they have done minimal work on it since it was purchased in 1981/82, so it is dated and then some! If I were a buyer looking at it, I'd be hard pressed to pay more than 225k because of all the work needed to update and modernize the house, on top of the fact that it is a larger house on a small corner lot with a small back yard.
I want my DH to be realistic about the decisions that will need to be made but I feel like I'm talking to a brick wall some days. I want to have a chance at a house for us to raise our own children in, not to go blowing what savings we do have on bailing his parents out of a terrible situation that nothing except 500K would solve now...
Does anyone have some advice as to how to deal with this?
Re: Feeling like the only voice of reason...
Oh hell no. HEEEELLLLLLLLL NOOOOO. We would be buying that house over my dead body. This would be a hill I would be willing to die on. There is no way on God's green earth I would risk ruining my financial future because his parents don't want to leave their house, (which sounds inevitable). This house is crippling them. They need to get rid of it. I might understand helping to fix and update the house, but to outright buy it, no way. Not happening.
My only advice to dig your heels in the ground and tell your husband this isn't happening.
Don't buy the house. Their problem, not yours.
And BergEn county, not bergAn county.
Living in Northern NJ and knowing home values, a house worth $325 can't be that great! It's not as if this is the family mansion! I was looking at 3BR split levels in the 90's that cost far more than that!
You need to put your foot down. If the ILS can't afford updates to the home they are in now, they're not going to invest in them in the future. They need to downgrade / downsize. Maybe a modest condo would work for them.
Tell your H that there is no way you are going to "invest" in his parents home to bail them out, and if that means separating your finances, you are willing to do so!
I would have a very serious talk with your H that while you understand him wanting to help his parents, that you need to consider your own futures first. You probably also need to remind him that this also involves you, so you have every bit of say in this decision as he does, and that you are 100% against this plan.
Honestly, I'd be shocked if his parents agreed to this plan in the first place. I don't have kids yet, but I'd be pretty damn embarrassed if I had to have my children buy my house because of stupid financial decisions I'd made and I'd rather short sale or foreclose than risk my kids' financial futures when they are just starting out themselves.
Thank you - that is exactly my feeling too. I've already told my husband that I wouldn't consider buying that house regardless of what was going on with his parents financial situation. And I reminded him last night (after he spend an hour talking to his brother about it) that it isn't just himself and his brother making this decision - our finances are tied together now that we are married so there is no 'his' money and 'my' money anymore.
I know too that if I were to get my hands on the house to help with fixing it up, I would change too much for anyone's liking...there is far too much of "but this was the wall that great-uncle-so-and-so painted puke green" feelings about the house. I would bring too much of that bad 'change' thing!
This too!!
They are bad with money and you don't even know the full scope of how bad and how much debt. They have no history of being financially responsible and yet your DH wants to bail them out? Does he realize it will not be the last time? It is understandable he wants to help his parents, but he can't with that plan. Someone needs to talk to a financial adviser asap.
They are drowning, don't know how to swim, perhaps refuse to learn to swim, and your DH and his brother are trying to throw a life raft which will not help in the long term. This has disaster written all over it for your relationship. If he goes along with it I would seriously consider separating ALL finances from his and making sure I was not libel for that mess.
As everyone else said, absolutely not! You should put your foot down.
And am I mistaken that your husband is currently unemployed and looking for work and is suggesting you buy this property while you pay all the bills? I hope I am wrong there because I would certainly think he had some nerve and strongly suggest you two head to counseling which to be honest couldn't hurt anyway in this situation. He needs to at least realize that his parents are not his responsibility.
Why is it so important to stay in this house? It's just a semi-retired couple in a big house, right? No children to consider for a school district? Why don't they just move to a smaller place with lower and more manageable monthly payments? Why do they NEED this place? Their children are grown, they don't need the room. It doesn't even seem like they are working in the city (which is driving up he COL) or need to be in that particular area.
Seriously, why are both brothers so invested in keeping their parents at this place? If they want some stabilty - how is this the place? Why not plan a structured "walk away" and get them settled in a new place with low overhead?
Anyway, there seems to be a lot of knee jerk reactions to "keeping the house!!" without a whole lot of thought of "is this a good idea, at all?"
How about this - "What could be better?"
This is definitely an H problem that you have if he is going behind your back and making arrangements with his brother against your wishes. That's wrong on so many levels. If my H did that to me, I'd be filing for divorce so quickly....I agree with PP's on this one. Say no to the deal because it will affect your credit too if you wind up involved in this mess. Sorry for his parents that they made poor financial choices, but it's their problem. I know it might sound mean, and heartless, but you should not bear the burden of any of this. Help them - not financially - but help them to get their stuff in order so they can sell the house, and downsize to something they can afford, whether it be a rental, or a smaller condo where they can manage their payments.