newly married couple seeking advise

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I recently got married and my father-in-law is proposing to pay my wifes $100k in student loans (1k monthly payment). In return he wants us to buy them a condo (approx $2k monthly payment). my in laws are retired. They own a 350k house.

- says he will make the mortgage payments and 1k monthly student loan payments.
- says we can claim a deduction on taxes for mortgage interest and property taxes

about us
- late 30's, 300k plus combined income
- 100k plus in savings
- no debts for me, she has student loan interest approx 3%. she is also leasing her car.
- we both rent seperate apts currently but i plan on moving in with her and increasing my commute

I dont like the idea, he has been propsing tgis before marriage:
- i rather be free of any financial entanglements with in laws
- when we buy a house a bank will see a existing mortgage as a monthly liability

Questions
- any positives or negatives i maybe missing?
- is this sort of thing common?
- if my wife insists on going along with her daddys proposal does she need my signature or approval as she will be taking on substantial debt?

- i'll be contacting professional financial advisor(?) and maybe a lawyer that would highlight all the legal challenges.

Thanks in advance guys!

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smartladka (Jan. 11, 2017 @ 5:45p) |

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congrats on the marriage.

to answer your question:
1) positive: - free moneies from inlaws
- lower taxes (deduction from property tax/mortgage interests)
negative: - it's a huge financial problem if the marriage didn't work out. (i hope that never happened to you)
- liability is okay, your income is high enough.

2) i can't speak for other cultures. but it's common in Chinese community.

3) She doesn't need your signature if she takes out solo-mortgage and she is the only one on the title. (some states require marrried couple's names to be both on the title. so need to check with your state. WA is one of those)

i hope that addressed some of your concerns.

SMH

good luck

Looks an Indian

I'd stay out of it...her debt, her parents, now it's her condo.  Be prepared for a credit score hit if marriage goes south and somebody stops paying on the mortgage.

smartladka said:   

- says he will make the mortgage payments and 1k monthly student loan payments.
- says we can claim a deduction on taxes for mortgage interest and property taxes

 

  The deductions are his, not yours,  because he is making the payments.  
You could do it by structuring gifts from your father in law to both of you, as long as the P&I payment was under $32,000. Then you would make the payments

smartladka said:   I recently got married and my father-in-law is proposing to pay my wifes $100k in student loans (1k monthly payment). In return he wants us to buy them a condo (approx $2k monthly payment). my in laws are retired. They own a 350k house.

- says he will make the mortgage payments and 1k monthly student loan payments.


Why don't they sell the $350K house to buy the condo directly?
smartladka said:   
about us
- late 30's, 300k plus combined income
- 100k plus in savings

  
Why don't you just write a check for your wife's $100k in student loans? This whole workaround is bizarre and smacks of some kind of scam.

edit:  not sure i understand.  so are you taking the mortgage and titling the condo in your name, and he pays that bill plus the student loan bill?  so the net result is that you have the condo in your name but don't have to pay for it or the student loan?  

 

This makes no sense at all....what else is going on here?

Why can't they just make the student loan payments and buy their own house? The very marginal tax benefit you may receive is not worth this convoluted mess.

If they want to help directly with student loans as a gift, then thank you. If not, no way.

MDfive21 said:   edit:  not sure i understand.  so are you taking the mortgage and titling the condo in your name, and he pays that bill plus the student loan bill?  so the net result is that you have the condo in your name but don't have to pay for it or the student loan?  

 

No, that's not my interpretation.  Somehow the FIL is suggesting that OP buy FIL and MIL a condo with a $2,000 monthly payment.  In return, FIL will pay off wife's (FIL's daughter's) student loan payments of $1,000 per month.  Sounds like FIL is stealing $1,000 per month from OP, unless the assumption is that OP and wife/daughter will own the condo free and clear once FIL and MIL both die.

If marriage fails, this is complete highway robbery, especially without prenup.  I can tell there is no prenup because of, well, you read the same OP that I did.  If the condo becomes a property that's fought over in the pending divorce, the in-laws living in it will only complicate matters.

Can anyone say annulment?  OP should run, not walk, to the nearest lawyer's office.

First bit of advice:  Learn the language.  advise != advice.

2nd bit of advice: avoid financial entanglements with family unless you are genuinely prepared to either lose your stake or take them to court.

Third bit of advice:  Don't have any kids.  Ever.

DTASFAB said:   
MDfive21 said:   edit:  not sure i understand.  so are you taking the mortgage and titling the condo in your name, and he pays that bill plus the student loan bill?  so the net result is that you have the condo in your name but don't have to pay for it or the student loan?  

 

No, that's not my interpretation.  Somehow the FIL is suggesting that OP buy FIL and MIL a condo with a $2,000 monthly payment.  In return, FIL will pay off wife's (FIL's daughter's) student loan payments of $1,000 per month.  Sounds like FIL is stealing $1,000 per month from OP, unless the assumption is that OP and wife/daughter will own the condo free and clear once FIL and MIL both die.

If marriage fails, this is complete highway robbery, especially without prenup.  I can tell there is no prenup because of, well, you read the same OP that I did.  If the condo becomes a property that's fought over in the pending divorce, the in-laws living in it will only complicate matters.

Can anyone say annulment?  OP should run, not walk, to the nearest lawyer's office.

  OP's FIL will pay for the student loan & the mortgage payment. 
 

You left out some very important facts:

1. How much is the condo?
2. How much will be put down on the condo?
3. Who will own the condo?
4. How responsible is the FIL? Will he in fact make all the payments timely? Does he have the money to make the loan and condo payments?

P.S. even if the answers to all of the above questions are favorable, this is probably still a terrible idea.
 

jason745 said:   
  OP's FIL will pay for the student loan & the mortgage payment. 
 


Yes, that's 100% clear...those suggesting otherwise really need some reading comprehension classes.

What is unclear is why the convolution?

My only guess is that the parents are trying to help financially in all ways they can. Sure they can just gift them the money, but they seem to also be gifting them a house.

It sounds like the house will be in the OP's name and the in-laws will pay all bills. This allows OP to have tax deductions and eventually a house in their name.

The main problems I see is that the OP gets stuck with the house (and paying mortgage) if in-laws die or stop paying. Ofc this is no worse than just having a house, so they can always move in , rent , or sell.

However these deductions, etc might only be valid if this is only house OP owns (primary residence) and while I'm sure OP can get second mortgage for own house, probably not second set of deductions.

It would behoove the OP to tell *us* why the in-laws want to do it this way, and if he doesn't know he should discuss it with them before moving forward at all.

OP is of indian/Pakistani origin based on the handle name. Ladka means boy in Hindi/Urdu. Now OP you're saying that the in-laws own a house yet they want you to buy them a condo? This doesn't makes sense unless they're asking you to live in the house and they live in the condo.

maybe ops inlaws have crappy credit?

Assuming you have positive interest in marriage and have no intentions of breaking it apart....

It is free money, plus you will get tax benefits, since Mortgage and Title wise you will be the owner of the condo, even though your FIL pays for it.
Worst case scenario, you will still keep the condo, though you will have to find ways to pay for it.

You also get Tax deductions if you either keep it as primary residence or even it is a second residence, it does not matter, you can deduct up to 4 properties.
I would say pay down the car, house and student loans in that order. Hopefully if a new law comes in to reduce or eliminate student loans, you could have benefits there.
 

Rajjeq said:   1. How much is the condo?
 

Yea, isn't that question #1? The first thing I'd want to know is whether you are putting > or < $100,000 at stake.

Just say no.  Seriously.  This is a disaster waiting to happen.

Chris.

Back out of the marriage and run. This is just a taste of a bad situation that will ultimately lead to family fights and eventual divorce.

OP said parents are retired so maybe they have teh wealth, but not the income stream to qualify for a mortgage? need more info..

This sounds just wrong. (Maybe a Troll)

They pay $1000/month
You pay $2000/month but get the Deduction on the interest. ($2000 a year?)
You lose $800/month in this deal.

Why is this appealing?

FIL's plan smacks of scam. If it sounds to good to be true...

IRS allows tax-free gifts of $14k per recipient per year. Your FIL could gift husband & wife each $14k ($28k total) per year without incurring taxes on the couple. The MIL may also be able to, and if so that would be a total of $56k tax-free gifts to the couple each year. Use that to buy a condo after a few years, or pay off her debt, or whatever you want. FIL sounds like he wants to put his fingers into everything. You'll regret it.

forbin4040 said:   This sounds just wrong. (Maybe a Troll)

They pay $1000/month
You pay $2000/month but get the Deduction on the interest. ($2000 a year?)
You lose $800/month in this deal.

Why is this appealing?

  Read the post. Father-in-law will pay monthly mortgage.

Just burn the 2k a month. You'll owe less after the shtf.

BostonOne said:   
forbin4040 said:   This sounds just wrong. (Maybe a Troll)

They pay $1000/month
You pay $2000/month but get the Deduction on the interest. ($2000 a year?)
You lose $800/month in this deal.

Why is this appealing?

  Read the post. Father-in-law will pay monthly mortgage.

  Please show me that part, I have read it 3 times
 
I recently got married and my father-in-law is proposing to pay my wifes $100k in student loans (1k monthly payment). In return he wants us to buy them a condo (approx $2k monthly payment). my in laws are retired.

 

Edit : Oh, I didn't see the later part where he says he isn't making payments.

forbin4040 said:   
BostonOne said:   
forbin4040 said:   This sounds just wrong. (Maybe a Troll)

They pay $1000/month
You pay $2000/month but get the Deduction on the interest. ($2000 a year?)
You lose $800/month in this deal.

Why is this appealing?

  Read the post. Father-in-law will pay monthly mortgage.

  Please show me that part, I have read it 3 times
 
I recently got married and my father-in-law is proposing to pay my wifes $100k in student loans (1k monthly payment). In return he wants us to buy them a condo (approx $2k monthly payment). my in laws are retired.




 

  Very first bullet point of the OP

Jeez, those of you saying "Get a divorce!!" just because the wife's parents proposed something that may or not be in the OP's interests (too much missing info to tell if it's a generous gift or some sort of bad idea, but too many people missed the part where the in-laws are paying the student loans and the mortgage)... but if you are ready to cut and run at the first potential issue, then marriage is not for you.

The OP didn't say if the wife is in favor, or if she even KNOWS about this deal. It doesn't say how much the condo is, if the in-laws are paying all costs of the house (taxes, insurance, maintenance) or just the mortgage, who is living in the condo or if will be rented out, who is paying the down payment and how much, and who will ultimately own the condo. It's good to be skeptical and all but it's not good to jump to conclusions without knowing what's really going on. For all we know the parents are basically giving them a condo, paying off student loans, and trying to save them money in taxes. Or it could be something else, need more info.

Oh I see,

The wording is extremely unclear.  The relevant part of the first paragraph says only, "father-in-law is proposing to pay my wifes $100k in student loans (1k monthly payment). IN RETURN he wants us to buy them a condo (approx $2k monthly payment)."

Only in the next paragraph is it clarified that FIL is paying the entire total $3K monthly payments.  If the first paragraph is allowed to stand on its own, it appears that OP is going to be expected to pay the $2K monthly mortgage payment.

Thanks DTASFAB.
I was really thinking the OP was insane. But he was just hiding the lead.

zapjb said:   Thanks DTASFAB.
I was really thinking the OP was insane. But he was just hiding the lead.

While I don't think it's technically incorrect to say "hiding the lead," the common expression for what you are referring to is "burying the lede."

https://en.wiktionary.org/wiki/bury_the_lede

1. Separate your finances from your wife.
Figure out who is responsible for which part of the family budget. e.g. monthly running budget - me, kids college fund - you, twice a year vacation - you, retirement accounts - both max out. Long term savings in brokerage account - me $X/mo, you $Y/mo, fund for purchasing the dream $2MM house - me $A/mo, you $B/mo etc. etc. etc. Your income(s) are sufficiently high such that each of these big line items will be small enough to be allocated without breaking the math.

2. Stop trying to meddle into how your wife makes financial deals with her dad. From all indications, you are and will probably always remain an outsider in that interaction.

puddonhead said:   1. Separate your finances from your wife.
Figure out who is responsible for which part of the family budget. e.g. monthly running budget - me, kids college fund - you, twice a year vacation - you, retirement accounts - both max out. Long term savings in brokerage account - me $X/mo, you $Y/mo, fund for purchasing the dream $2MM house - me $A/mo, you $B/mo etc. etc. etc. Your income(s) are sufficiently high such that each of these big line items will be small enough to be allocated without breaking the math.

2. Stop trying to meddle into how your wife makes financial deals with her dad. From all indications, you are and will probably always remain an outsider in that interaction.

  I think point 2 is a bit ridiculous. If two people are married, they should both be involved in financial decisions concerning hundreds of thousands of dollars.

puddonhead said:   1. Separate your finances from your wife.
Figure out who is responsible for which part of the family budget. e.g. monthly running budget - me, kids college fund - you, twice a year vacation - you, retirement accounts - both max out. Long term savings in brokerage account - me $X/mo, you $Y/mo, fund for purchasing the dream $2MM house - me $A/mo, you $B/mo etc. etc. etc. Your income(s) are sufficiently high such that each of these big line items will be small enough to be allocated without breaking the math.

2. Stop trying to meddle into how your wife makes financial deals with her dad. From all indications, you are and will probably always remain an outsider in that interaction.


That's not typical of Indian subcontinent culture.

smartladka said:   - says he will make the mortgage payments and 1k monthly student loan payments.
- says we can claim a deduction on taxes for mortgage interest and property taxes
 

  One of the requirements for taking a home mortgage deduction is that "you are the primary borrower, you are legally obligated to pay the debt and you actually make the payments." If you dont make the payments (but your FIL does), you cannot take the deduction.

My guess is that the in-laws do not want to have any assets on books. Could be because that would be disqualifying from certain public benefits, could be some other reason.

If your spouse can qualify on her income alone, there's no reason you have to be involved in this deal at all. 

puddonhead said:   1. Separate your finances from your wife.
Figure out who is responsible for which part of the family budget. e.g. monthly running budget - me, kids college fund - you, twice a year vacation - you, retirement accounts - both max out. Long term savings in brokerage account - me $X/mo, you $Y/mo, fund for purchasing the dream $2MM house - me $A/mo, you $B/mo etc. etc. etc. Your income(s) are sufficiently high such that each of these big line items will be small enough to be allocated without breaking the math.

2. Stop trying to meddle into how your wife makes financial deals with her dad. From all indications, you are and will probably always remain an outsider in that interaction.


So, so wrong. Figure out that you and your wife are responsible for you and your wife, together. Mom and Dad are responsible for their financial life.

Chris.

Skipping 23 Messages...
Hi FWers -

First very Sorry for being AWOL! I was out of the country without data connectivity.
Second - I sincerely appreciate all the thoughtful responses!

I've discussed with my wife and we agree that first and foremost we will buy ourselves a house - our primary house. That would take a few years and will give me enough time to get to know my FIL and MIL.

I'm not in favor of getting into any financial ties with my in-laws. Financial risk if they are unable to pay and in my experience money usually turns relations sour!
I agree that they should simply buy a condo from the sale of their house - something they can easily afford.

I would again like to thank everyone again for their time and thoughtful response!



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