Advice Regarding Wedding Redux...

Either give it to them as a gift, or tell them you cannot help them right now. They are adults, they have to make choices and sacrifices!

Nooooooo! Unless you are in a position to gift them the money, it sounds like a really bad idea.

If you do this, you need a legally binding loan document.

It's illegal to borrow money for a downpayment. Scratch that - not illegal, but it will violate the mortgage contract.

And if they need to borrow to afford it, then they can't afford it.

Isn't this similar to how the whole financial crisis got started - giving loans to people who could only afford them if they stood on tiptoes every month and never turned on their air conditioning. Not to mention if an actual crisis hit - they couldn't afford it.

BTW - they can get rid of PMI after they have 20% equity. So if it's only 10k and they're so good with money, then they can pay that extra on the mortgage (instead of paying you back) and within a year can cancel PMI.

If you can't afford to gift them $10K, then don't loan it. Most loans end up as a gift, with the person "unable" to return it. if they want a house at $250K, then they should have enough to deal with the PMI. Buy a cheaper house. That doesn't sound like the very financially responsible thing to do....IMHO.

Let them refi to get the PMI off.

Don't give the money. With each kid they have, you are going to become more and more resentful....none of this will turn out well.

Bad idea. Really bad idea. If your BIL can't afford a down payment, how in the heck is he going to be able to afford to save $10,000 to pay you back, since he will have a house payment that he can't afford, and a new family to pay for, to boot?? I'm sorry but I'd say no, and hopefully they won't be mad. But oh well. You'll never see it again if you give them the $

If DadOnP is right--then it needs to be a GIFT--with a letter stating such.
IF you can afford to give them a $10K gift--fine. Loan? Nope. They can refi in a few years & get rid of the PMI all by themselves.
Hopefully, along with being financially "wise" they are also mature enough to deal with the "no" answer, if that's what you give!
Good luck!

Be prepared to 'loan' only as much as you are willing to lose. Because the chances of getting that money back are slim-to-none. As a side note, he will need to explain to the bank where the money for the DP came from, and if it's a loan that may count against him for financing purposes.

I would simply tell him you can't afford to loan that kind of money right now, and suggest that there are a lot of good deals out there right now in real estate so perhaps if they look a little harder/longer they might find something more inline with their budget. Also might be helpful to point out that they don't have the huge family yet, so a less expensive house might be a good way for them to build equity to use as a DP on the larger house when they actually need it.

Sounds to me like they are just taking advantage. Either they can afford it or they can't. If he doesn't have the $10k now, he certainly won't have the extra cash flow when he has a huge mtg pmt. They need to make some grown-up decisions here - big house or big wedding.

I agree with you. I would perhaps give what you can afford right this moment as a wedding gift, with no expectations of a payback. An amount that you and your husband can agree on that won't make either of you feel sick if you do not receive it back... like a $1000 check or something. Because odds are, you won't be getting it back at all,. And your husband is wrong... it does not sound like his brother is being financially wise at this point.

ETA: If they have no credit card debt and good credit - then they can wait six months and save the money they need to save to afford the bigger house, get married and all that jazz. Just because one has good credit does NOT mean they are "financially wise" - it just means they pay their credit cards on time - it doesn't mean they know what they can afford and how to save. They should have been PRE-APPROVED for a loan PRIOR to looking at houses - then they would know what they can and cannot afford.

ORIGINAL:
Sorry - they are not "financially wise" in my book if they have to borrow money to avoid paying PMI - and especially since your BIL said they can't afford $250K but they can afford $249K - sorry - but the difference in payments for $1K is about 3 CENTS IF EVEN THAT!!! And PMI is NOT that expensive. After they get to a certain point in equity or time length on the loan - they can cancel it.

And to top it off - the $10K that you are "loaning" them - is NOT a loan. As bank records that they will HAVE to show? Will show an influx of money and they will ask where it came from. You will have to write a letter of a "GIFT" that does NOT need to be paid back.....if they can't afford the PMI - they cannot afford to pay you back.

I would say - I'm sorry - we cannot take $10K out of our savings for you.

They have too much going on.
* bigger house they can't afford
* more kids they can't afford
* quitting a job that she needs
* wedding expenses aren't being considered

While it's not your place to tell them how to spend their money - if they want to borrow money from you - I would tell them that they need to borrow the Dave Ramsey or Suze Orman books from the library and learn about financial responsibility. You are afraid that they are biting off more than they can chew and don't want them to get hurt by their own actions.

Then tell your husband - NO FREAKING WAY - for the reasons given above. It's GREAT to want to help out family! It's even better when you CAN do it. however, if you want to truly help them? SAY NO!!!

Here is my Rule with giving money to anyone - if you can not affoard to GIVE the money then do not. Can you affoad to GIVE the money or any money no matter the emotions involved? If you can, then you and your husb need to talk about it - if you can not then problem is solved.

NO!!! nonononono!!

If they are so financially wise, WHY are they buying a house they can't afford?! (other than " I want it, I want it, I want it, I want it, I want it, I want it, and I want it NOW!"?!?!)

Dave Ramsey's advice on the matter: “One definition of maturity is learning to delay pleasure. children do what feels good; adults devise a plan and follow it.” Additionally, in re: to buying a house together the first year of marriage (and we DIDN"T do this - and let me tell ya, we wish we had!): "The first year is one of the toughest years of marriage and you need to spend that year on each other, not on buying drapes and furnishing a house. You don’t know each other well enough to buy a house together yet and you definitely don’t know how close you want to live to mother-in-law! "

Good luck with DH! I don't envy your struggle here....

No. No, no, no, no, no way would I lend them money. The other moms and dads have given you lots of excellent reasons why not. I just wanted to add one thing. You are irritated with your soon-to-be SIL shopping for a wedding dress now, imagine how you will feel every time you hear about them spending money or shopping for something if they owe you and your husband money. I suspect your relationship with them would really suffer. Love them enough to let them do this on their own.

Do NOT lend them money!! That is a lawsuit and hurt feelings waiting to happen. I also wouldn't co-sign a loan for them.

If they have such great credit, one option that they can look into, which I have used in the past is an 80-10-10, 30y fixed loan. That works out to a 1st mortgage for 80% of the price, a 2nd mortgage for 10% of the price, and a 10% down payment. This avoids the PMI.

First, they can't borrow the downpayment. You would have to gift it to them. As I don't know very many people who have an extra 10K laying around the house, are you in the position to do so? If you and hubby are taking this money out of a 401K, don't do it!!!!! Quite honestly, I would not be willing to do this.

If you are not comfortable with this, then you need to tell your husband that. He also needs to have a one on one talk with brother.

If you don't have the money to lend without resenting it when/if they don't pay you back, then you shouldn't be lending them money. You don't want to ruin your relationship with them over money, and if you give them $10,000 it sounds like you'll be second guessing how they spend their money. It's too much drama, so I'd respond to them that you don't have $10K to lend right now.

No. If you want to gift them $10k, that's one thing. If you wouldn't gift them that amount, then do NOT loan them that amount. It sounds like they could get the loan but would have to pay PMI, and this is just a convenience to save them the cost of PMI. It won't hurt them to pay PMI. What they could do is tell the lender that they would like to pay the PMI up front, which will save some on the cost of the PMI in total (Suze Orman talks about this a lot). They also could just suck it up and pay the PMI for the first 2 years and until they have 20% equity in the house. It is NOT an expense they will have for the total length of the loan. So, they could buy the house, put every extra amount they can against the house principle to build up 20% equity and in 2 yrs get rid of the PMI. Since they would already be paying you back $10k (in theory), they could just as easily pay that amount towards their house. Besides this being an unnecessary loan, money and family (or friends) does not mix well. You and your husband are not a bank.

Updated: By the way, are they getting a mortgage based solely on your BIL's income or both incomes? If his fiancee intends to quit her job once they have kids, the financially responsible thing to do is to purchase based solely on his income.

No. Even though you have the money on hand, it is such a bad idea. Are you fully funding retirement accounts for the two of you? Do you have an 8-month emergency fund? Do you have college savings accounts for all of your kids? If not, this money you are loaning is taking away from your own future and your childrens' future.

Like some of the previous posters pointed out, if you loan them money for the down payment, and they do not disclose it as such, they will be committing mortgage fraud.

If it makes your husband feel better, just give them $1000 as their wedding gift and call it good. Good luck to you! I hope you can talk some sense into your husband.

I remember hearing as a child to NEVER loan money to family. If you can give it and want to give it, do it as a gift. If giving it isn't in your best interest (1 year emergency fund, retirement accounts for both of you, paid up life insurance, etc) then politely refuse.

If hubby is determined to loan the money, get it written up in a contract, with an agreement on how and when it will be repaid. I know someone who did this with a loan from his father. It was a signed contract and set up with an automatic draft from his bank account just so there wouldn't be any hard feelings.

My personal feeling is that no one should be encouraged to buy more house than they can afford.

Money problems between a couple are the worst. Blessings to you and hubby as you work this out.