Don't Lien On A Friend: Why You Shouldn't Go To Loved Ones For Home Loans
Posted on: 21 November 2016
When you have stars and dreams of real estate ownership in your eyes, it can seem frustrating to wait until you can more easily afford a down payment or attain a mortgage. However, when you want to buy a home, try to look for other opportunities for raising the funds outside of your own circle of friends and family members. Your real estate agent can provide you with information on local banks and lending companies who may be able to work with your unique situation to help you own a home.
Reason #1: Changes to the Dynamic of the Relationship
While it is very possible to have a dual relationship with people, borrowing money from a friend or family member can create conflicts, strains, and a large amount of stress. For example, if you always confided to your loved one before about money woes, you may feel uncomfortable doing so if you owe them a great debt. A friend who asks you for a small favor may be greatly offended if you bow out while owing them money. You should know that the dynamic of the relationship with your loved one will change when you borrow money from them.
Reason #2: The Worst-Case Scenario Is Possible
Nobody wants to envision losing their job or being involved in an accident that could render them unable to continue gainful employment. However, these things do happen to people every day, and it is important to consider all possibilities before taking on a huge responsibility like going in debt to family members. When you take out mortgages or bank loans, they may have terms that protect you in case of certain occurrences, but more casual loans from loved ones may not offer such protections. Imagine how you would feel if something did happen, leaving you unable to repay money that your loved one will need. That should help you decide whether you should accept such a loan.
Reason #3: Family Gatherings Can Be Miserable
When you owe a great debt to a loved one, you can start to feel a bit like their servant. They may inadvertently expect extra favors from you, and it can even feel embarrassing to see one another at family gatherings. You may wonder how many people have been told about the debt that you owe, and you may also feel compelled to avoid talking about money altogether or even anything you have bought that costs money. Since that might bring the conversation back to the debt, it can be hard to have normal discussions without watching every word you say.
Finally, keep in mind that it is generally best to go with more traditional real estate mortgage services. Talk to your real estate agent about what they recommend for your individual situation, and they may be able to recommend local banks or mortgage providers who can work with you no matter what your current financial situation is. Once you've secured sufficient financing, ask your real estate agent to show you homes for sale in your area.
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