$11,000 Roof / Loan to Family Member

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bog72upCash
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Joined: Fri Mar 30, 2018 5:13 pm

$11,000 Roof / Loan to Family Member

Post by bog72upCash »

Hello,

I wanted opinions concerning the following proposal: I am thinking of lending $11K (interest free) to a close family member. I previously lent that family member $3000 for dental work. That plan was for 24-month installments which was paid off. They faithfully paid the first 16 payments. As a gift, I paid the last 8 payments because they were in desperate need of a vehicle. Not once did they ask for that loan to be forgiven. I offered to pay those last 8 months.

In lieu of paying off the remaining 8 payments, they were able to place a down payment on the car and begin paying their first few months on that vehicle. They are still paying for that vehicle; I think that they are nearing the end of that car note.

That was about 4 years ago. This proposal concerns a loan for a new roof (there is an occasional leak). They fear financing through Y-Green, since they have a mortgage and do not want to increase their mortgage payment. The roofer who does great work (I can attest to that), is only offering financing through Y-Green. [url https://ygrene.com/ url] (payment available through property taxes). The mortgage they have is a 40 year mortgage obtained as a result of the market crash in 2008 and subsequent modification and refinancing of the first mortgage. They'd rather take out a loan instead of putting the house so to speak, on the line.

Should I offer the loan, or is there a better way to obtain financing to pay for a roofing job? Looking for ideas.
Last edited by bog72upCash on Fri Aug 28, 2020 1:33 pm, edited 1 time in total.
delamer
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Re: $11,000 Roof / Loan to Family Member

Post by delamer »

HELOC?
fuddbogle
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Re: $11,000 Roof / Loan to Family Member

Post by fuddbogle »

If you're in a position to loan that money, yes.
student
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Re: $11,000 Roof / Loan to Family Member

Post by student »

I do not understand their fear of an increase of mortgage payments. They have to pay you back, so their monthly payment will increase. From what you have wrote, they seem to have full intention to repay you. However, it is possible that they simply cannot afford the house. So they may have trouble paying you back.
JHU ALmuni
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Re: $11,000 Roof / Loan to Family Member

Post by JHU ALmuni »

11K will increase their mortgage payment by less than $30/month. If that's a concern, there are more important stuff to talk about before we get to the roof. On a side note, I personally would not want to be involved in this you helped one time and that's great but you will probably start seeing a pattern.
fourwheelcycle
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Re: $11,000 Roof / Loan to Family Member

Post by fourwheelcycle »

It sounds like you are very supportive of this person and you want to help them. It also sounds like they will try in good faith to pay back your loan. If something happens in their life during the payment period, they will be much better off dealing with you as a compassionate supporter than with an arms length commercial loan company. It also sounds like you could afford to turn any endangered outstanding portion of the loan into a gift.

I would encourage you to lend them the money and save them the fretfulness, payoff risk, and extra interest cost of having to take out a commercial loan.
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CAsage
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Re: $11,000 Roof / Loan to Family Member

Post by CAsage »

Since it's clear you would both be willing and able to forgive the loan (and forget it), I would support a very close and dear family relative like that. One minor concern.... What is with the 40 year mortgage? Is there a red flag there about subsequent refinancing - in your shoes, and looking out for their long term protection of the house and equity, I would hope that they have not been refinancing to cover other expenses, or I would be worried on their behalf. I had a neighbor who lived off the money pulled out of every house price increase, whole house of cards collapsed and they were foreclosed in 2008. And that was a house they had inherited from their parents. Just suggest ensuring your family member has a long term plan to stay solvent.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
123
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Re: $11,000 Roof / Loan to Family Member

Post by 123 »

CAsage wrote: Fri Aug 28, 2020 3:13 pm .... What is with the 40 year mortgage? Is there a red flag there about subsequent refinancing - in your shoes, and looking out for their long term protection of the house and equity, I would hope that they have not been refinancing to cover other expenses, or I would be worried on their behalf. I had a neighbor who lived off the money pulled out of every house price increase, whole house of cards collapsed and they were foreclosed in 2008. And that was a house they had inherited from their parents. Just suggest ensuring your family member has a long term plan to stay solvent.
+1 I would be concerned as well if they found a 40 year mortgage a necessity. Are they currently paying PMI?

I'm of the opinion that it's okay to go through with your proposed loan arrangement given that if the loan isn't paid back you could just forgive it.

While we don't have any information or insight into their income or expenses I would suspect that there is something draining their finances if they can't accommodate a (routinue) replacement roof 10+ years into their mortgage.
The closest helping hand is at the end of your own arm.
softwaregeek
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Re: $11,000 Roof / Loan to Family Member

Post by softwaregeek »

I would wager that a very significant percentage of the population couldn't come up with $11k for a new roof on demand.

There are a lot of people who never really recovered from the 2008 recession too.
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Nate79
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Re: $11,000 Roof / Loan to Family Member

Post by Nate79 »

It sounds like they have made significant poor financial decisions in their life. Living off debt, buying a house they can't afford, and needing to cover emergencies by digging a hole by borrowing from friends. I would get them Dave Ramseys Total money makeover and hopefully they will learn to manage their money better by living below their means. Giving them a loan just perpetuates what is currently a hopeless situation until they educate themselves.

Edited to add: they can patch up the roof in piece meal until they can actually afford it. Or cover with a tarp, etc etc.
Last edited by Nate79 on Fri Aug 28, 2020 9:18 pm, edited 1 time in total.
TimeTheMarket
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Re: $11,000 Roof / Loan to Family Member

Post by TimeTheMarket »

I wouldn't. I question how much you are really helping them.

Are you helping or enabling? Are they going to just rely on you as a source of funds indefinitely? Why is it that they have a life and a house and a car yet seem unable to get anybody else to lend them money?

Also it's clear they cannot afford the house if they cannot afford its upkeep without dire stress. Perhaps they should consider selling it.

ithink Nate79 above me nailed it.
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Frugalbear
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Re: $11,000 Roof / Loan to Family Member

Post by Frugalbear »

bog72upCash wrote: Fri Aug 28, 2020 1:29 pm Hello,

I wanted opinions concerning the following proposal: I am thinking of lending $11K (interest free) to a close family member. I previously lent that family member $3000 for dental work. That plan was for 24-month installments which was paid off. They faithfully paid the first 16 payments. As a gift, I paid the last 8 payments because they were in desperate need of a vehicle. Not once did they ask for that loan to be forgiven. I offered to pay those last 8 months.

In lieu of paying off the remaining 8 payments, they were able to place a down payment on the car and begin paying their first few months on that vehicle. They are still paying for that vehicle; I think that they are nearing the end of that car note.

That was about 4 years ago. This proposal concerns a loan for a new roof (there is an occasional leak). They fear financing through Y-Green, since they have a mortgage and do not want to increase their mortgage payment. The roofer who does great work (I can attest to that), is only offering financing through Y-Green. [url https://ygrene.com/ url] (payment available through property taxes). The mortgage they have is a 40 year mortgage obtained as a result of the market crash in 2008 and subsequent modification and refinancing of the first mortgage. They'd rather take out a loan instead of putting the house so to speak, on the line.

Should I offer the loan, or is there a better way to obtain financing to pay for a roofing job? Looking for ideas.

I did not read the other comments because I didn't want to influence my response. Here are my thoughts:

If you can loan them $11k and it won't put yourself into jeopardy, I'd say go for it. You only get one turn on the short circle of life, it's great to help close family members. Remember we are all just one step away from tragedy and solid people don't forget people who helped them. I'd say that they are good, loyal, and responsible folks for you to even consider helping them without asking.
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David Jay
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Re: $11,000 Roof / Loan to Family Member

Post by David Jay »

Assume the $11,000 is a gift. If you can afford to gift them, then proceed.

If they pay you back, all the better.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
brad.clarkston
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Re: $11,000 Roof / Loan to Family Member

Post by brad.clarkston »

My golden rule is never loan money to family if you give them money it's a gift.
Money fights between family is the worst.
Dottie57
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Re: $11,000 Roof / Loan to Family Member

Post by Dottie57 »

If I could afford to lose the 11k, yes I would do the loan. It does however seem like you may become their bank which is not a good position to be in. Is there anything you can do besides loaning money to help them to secure a better financial foundation?
Trader Joe
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Re: $11,000 Roof / Loan to Family Member

Post by Trader Joe »

"$11,000 Roof / Loan to Family Member"

I would not hesitate to gift my family members the money.

No loans. They are family.
Big Dog
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Re: $11,000 Roof / Loan to Family Member

Post by Big Dog »

has you/he gotten a 2nd opinion on the roof? Perhaps its repairable for a whole lot less than $11k.

yeah, I saw that you said the roofer does great work, but that is different from actually needing the work. We had a roofer -- who did great work -- come by last year and say we needed a new roof, $15k, as we had more than one leak. After three other opinions/quotes, one roofer said that he could repair it for $1k. He said at worst it should buy a few years before replacement. As it turns out, one of the leaks was a cracked air vent for the water heater; it was rusted out below the shingle/roof line so not noticeable until the shingles were pulled.

After heavy rain last winter, it was dry inside. So far so good.
plog
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Re: $11,000 Roof / Loan to Family Member

Post by plog »

Can you really loan them 11k and not be paid back? That's not a financial question.

What happens to your relationship if they don't? Don't just think about your response, think of theirs. They may feel shame and withdraw/avoid you. They may not feel shame and that may hurt you even worse.
harrychan
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Re: $11,000 Roof / Loan to Family Member

Post by harrychan »

I dunno. Last time my roof leaked, I walked into home depot and got a can of tar, climbed up the roof and generously applied it to leak areas. No leaks since. Cost - $15.
This is not legal or certified financial advice but you know that already.
Cruise
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Re: $11,000 Roof / Loan to Family Member

Post by Cruise »

OP: You just have to make up your mind the best you can. I think you know what you should do.

Everyone else--for those of you who said not to loan the money, but to gift it to the needy family member: Would you still feel the same way if the family member was financially irresponsible? Is giving large amounts of money to family contingent upon them being "good/responsible/"select a descriptor" people," or is the genetic relationship all that matters?

Just curious.

Thank you.
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wander
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Re: $11,000 Roof / Loan to Family Member

Post by wander »

Op, you know who they are and where they are from. It's not like you just knew them yesterday. If you trust them, you should do it. :D
My brother borrowed me money a few years ago. I asked him about the payments plan for 4 years, but he paid me back in two years. Family is everything to me.
Last edited by wander on Sat Aug 29, 2020 5:31 pm, edited 1 time in total.
jaqenhghar
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Re: $11,000 Roof / Loan to Family Member

Post by jaqenhghar »

David Jay wrote: Fri Aug 28, 2020 9:06 pm Assume the $11,000 is a gift. If you can afford to gift them, then proceed.

If they pay you back, all the better.
This.
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