lending money to childrem

I have slightly more than 100k that I inherited from my parents. It is currenly in a jumbo CD earning almost nothing and when it comes due this July the prospects aren’t much better. Our house is paid for, I am retired with a pension. My husband will retire in a year with a pension and social security. We have 401ks and IRAs worth more than$1 million. Would it be okay to use my inheritance to help my youngest son buy his first house? I would charge him the going mortgage rate on the money I lend him. I think he might be able to get a better deal if he offers to pay cash and I will get a better return on my money. There is no doubt that he will keep up the payments.

Terry Says: This is a wonderful idea — but you have to do it correctly or face all kinds of problems.  You want to structure this strictly within the financial laws — so he can deduct the interest, and you will claim the interest he pays as income.  It could all be very complex — except that there is a company NationalFamilyMortgage.com that will handle all the details, including processing payments.

Then, just in case something terrible happens and he can’t repay or make payments, your loan will be structured as a business deal.  You will never raise an eyebrow when he takes an expensive vacation, but is two weeks late on the mortgage payment!  Do it the right way and it will benefit all concerned.

PS  You might want to make this offer to your other children — or at least let them know this is strictly business.  And that they will not be losing a share of your estate because of this deal.  You don’t want to create jealousy or greed between siblings.