[USER]

I have the opportunity to purchase my fathers house with acreage. Funds are needed to pay for my mother’s memory care center.

Instead of selling to the market im considering buying to keep it in the family.

Sell price is $600k. I have about $500k in HYSA earning -3.9% interest that could be used towards the purchase. Given the ugly interest rates for a mortgage sitting around 6.2%.

I’m torn between trying to scrape together the entire $600k to pay cash or finance about 480k and keep -400k cash for investing.

This is a new loan so mostly all paymentent will be going towards interest.

Goal would be to pay it off in 15yr. I prefer to leave some cash available for emergencies/job loss but hate the idea of missing out on growing the cash.

Any suggestions on risks, alternate options to consider here?

[Allison]

I’m not smart enough to know much, but I wonder if a trust would work here.

Where instead of having to buy the whole house as a traditional mortgage, you’d be the trust holder but be expected to pay X towards your mother’s care?

[Tom]

You say your dad‘s house, where is he in all this? Where will he live?
Going forward save 50 to 100 K as an EF and only finance the balance after emptying your high-yield savings account.

Give both your parents a hug from me.

[Mike]

Could your father set the sale up to you as a fixed / 0% structured payment over a period of time and still satisfy the medical funding needed?

If you’re trying to maintain Medicaid eligibility later on for either parent you might need to show interest on the loan.

[Jonathan]

Why not make a deal with your dad without involving a bank. I did this and we agreed on a 2% rate, I was able to pay the house off in 11 years.

Whatever you do get the agreement legal with a contract, we used an independent attorney that neither of us used prior

[Robert]

There are a number of issues here; all of which are intersecting, for lack of a better term.

I would DEF pay the money for an elder-law attorney to see what the Medicaid look-back period might be; (I think it’s five years, but consult with an expert) and you have received an excellent suggestion vis-vis a trust.

These are extremely complicated issues; and you are better off paying the necessary fees to consult with elder-law/trust attorneys.

[Theresa]

Should your parents deplete their assets, your mom may need to go on Medicaid to pay for her long term care. Medicaid has a 5 year look back period for the disposition of assets.

If the sale is at market value, you likely will be fine.

But you may want to do some additional research to make sure it would not affect either of your parents potential Medicaid application for future long term care.

[Andrea]

They should also consider that selling to you would reduce closing costs by at least 6%, due to no realtors. They can do a seller financed mortgage for the balance at zero interest.

You pay the monthly to dad to cover memory care.

[Author]

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