Hi, all – I am Dave, new to the forum(s) here. I'm sorry if I picked the wrong forum, but I think "Real Estate" comes the closest.


I know our situation (and goals) are perhaps a bit unusual, but we’re apparently not the first to try engaging in “creative” real estate financing.

I’ll probably get 'laughed out of town' by the lot of you, but it’s worth a try. I have a wonderful wife and three little ones who are facing an uncertain future, in terms of a home.

Following are the basics – I will do all I can to be brief. (No, these are not the lyrics to a new country western song):

- I divorced in 1993 (she was immature and left me and the kids to run away with a cowboy trucker). The divorce and the aftermath thereof heavily damaged my credit.
- Remarried in 1997, moved from west coast to east coast. Began living in basement apartment of her parents’ home, with the intention of taking their house over and buying it from them. Remained in the house for additional years due to their failing health – we shared the house and expenses, and also were able to care for them. Was a wonderful arrangement to all concerned.
- Had good employment, but things went south in 2000 and 2001, due to economy, losing job, losing my shirt (and the entire wardrobe) in the stock market (there went my inheritance).
- Job loss and extended unemployment in the technical sector ultimately made it impossible to pay credit card bills etc. Credit suffered further damage (it is now worse than the worst).
- Wife’s sister also lived in the house for several long periods, and she managed to sabotage our plans to buy the house. (She has destroyed her own finances twice, and then her parents’ finances just before they passed on).
- Wife’s parents both passed away in the last few years. Their will stated that we were allowed to remain in the house for another four years (which will be up in May 2010).
- We might remain in the home another couple of years or so, as her other siblings approve. But it seems it might be more prudent to try to buy now, before housing prices rise too high.
- Due to horrendous condition of credit, we have been thinking of trying some kind of personal financing from a benefactor (instead of going through a real estate broker, mortgage company, etc.).
- At the moment, what we need help with is the mathematics. We’ve tried mapping the numbers out on paper – after a number of attempts, we keep ending up mind-boggled. We just cant quite get the math to all make sense. For anyone who wants to try their hand at the mathematics, here are the basic figures.

1.) Begin with an estimated value of the home at $650,000.
2.) There is an existing loan against the home with a balance of $162,000 which would have to be paid off, and financed within the new loan for our purchase of the home.
3.) My wife’s other three siblings must get their exact, equal share (one-fourth) inheritance: $680,000/4 = $170,000 each
4.) Each would share one-fourth of the existing debt, reducing the $170,000 by one-fourth of the debt: $170,000 – $40,500 = $129,500 final inheritance amount.
5.) However the math can be worked, we are looking for a monthly payment of about $3,000.

That’s all for now – if I go on, I’ll start talking in circles or something. I just need some answers, I love my family (includes 3 little ones, one is adopted) and I’ve got to nail down some answers and get some help in these uncharted waters. And with my credit in tatters, I need to figure out some kind of creative way to provide a home for them – possibly, as I mentioned, with the help of a benefactor who might be willing to make a “personal home loan.” We would love to keep our children in the home which they have shared with their grandpa and grandma (who also built it).

Thank you in advance . . . we’d be most grateful for any and all constructive advice/information, concerning both the math, and any other ideas on how we could get this home for our family without involving realtors or mortgage company.

Sincerely,
- Dave in Virginia, USA

It sounds like you could do with some professional accounting help - there's a lot of your plan crosses legal issues that you'd need to ensure you had professional advice on.

Why not leave the country? Latin America is unbelievably cheaper than the States. Your kids could go to private schools, and you guys could all live in a nice house or apartment. Plus, food is not imported (unless you buy the expensive stuff). You don't even have to look for ways to live cheap--it's the way of life, and it's a hell of a lot better than starving in the US. But that's just my opinion, and it's heavily colored.

I hear Panama is looking good in terms of its property market and economic future. Maybe you could look in to that.

I think your issue is the price range. If you cannot get financed due to poor credit, look for a home you can purchase with your 129K. In any circumstance if you cannot afford a home on a 30 year fixed rate mortgage do not attempt to make the deal work with "creative financing" i.e. ARMs, Interest Only or Option ARM loan programs. We all want to impress people with the golden address that people say "Oooh you live in XYZ Heights, must be rich." The reality is you are closing in on retirement and still living in your in-laws basement. Stop, evaluate and recognized even if you can afford 3k per month why not down size and save for that next spell of unemployment. In you narrative you mention you have been through the extended sabbatical. We will not all live in half million dollar homes. Welcome to America 2010. The new American Dream will be much different.