[USER]

My husband and I (early 30s) are preparing to welcome our 3rd child and looking to find a house with more space for the growing fam.

We’ve been average about $180k combined the last few years, but hopefully will be closer to $250k for 2025 with a new job my husband started late last year.

Here’s where things get interesting and we could use some advice. We have close family friends (a childhood best friend’s parents) who are preparing to retire and sell their family home they raised their kids in.

My husband and I offhandedly said “we love your house, too bad it’s beyond our budget” to them one evening over the holidays.

They’ve since expressed to my parents (they are best friends as well) that they would be happy to work with us to find a way to purchase their home from them.

They love their home and while it’s a 4/3 it is in a neighborhood where most original homes are being sold for knock down custom 4,000+sq ft homes.

Neither of their kids will ever use their home and so us being interested really does give them joy, but I’m just not sure how we would go about this?

They could probably get about $850k for their home and we’re currently only approved up to $685k and really more comfortable closer to $600k with current interest rates.

They mentioned to my parents “they would work with us on financing” because the sale of the house doesn’t necessarily factor into their immediate plans, but eventually they would see the full home value of the sale.

I have NO idea how this could work and would like to know if something like this is even possible or makes sense to consider.

Perhaps someone’s had something like this transferring property off market with family or close friends?

Any advice or suggestions on how we could proceed are appreciated!

[Jamie]

Ignore the financing part, but can you afford an 850k house? That should be your first question.

That’s a huge difference from what you qualify for so you need to be realistic with yourself here.

Perhaps they are considering owner financing or a rent to own with balloon purchase.

[Tony]

First, have a serious and direct conversation with the prospective sellers if you’re interested rather than engaging in gossip. 2nd, they’re talking about assisting with financing, not lowering the price of the home.

If the value of the house is 250k outside of your comfort zone then it doesn’t sound like financing will be the problem here.

I’d focus more on your own home and making due with what you have through renovations and creative rearranging or downsizing stuff vs an extreme lifestyle inflation and making yourself house poor.

[Rick]

Potentially seller financed until you brought down terms to something commercially acceptable to mortgage bank. Maybe a handful of years time.

But either way with this sort of lifestyle inflation, make very sure you don’t use “it’s for the children” to get crown molding, a big garage, a big kitchen island, a jetted bathtub and all those expensive things you kids don’t even know about to care about.

[Cindy]

My brother got owner financing for up to 10 years. At year 5 he refinanced at 2.25% rate the balances owed to owners.

Bank would have never approved him originally because it was way over what he was approved for….

Everything worked out great for him.

[Dawn]

If they would do seller financing around 4%, you would be near the same payment as you would be doing regular financing for a $600,000 home.

And seller financing is way cleaner than rent to own.

The only difference is they are the bank instead of Wells Fargo or whoever.

[Dara]

I’d not focus on the price of the home but on the payment. What drove real estate up was low interest rates so payments were affordable on high priced homes.

If they give you a 3-4% loan your payment will be the same as if you were in a 600K home.

If you really like it maybe work with them, worst case you sell it. It may be in their best interest to owner finance and have less income coming in each month.

If they don’t want to hold for 15-30 years- maybe they would do a 5-10 year balloon at a very low interest rate? Discuss lots of options, see a real estate lawyer.

The key to success is finding the HOW- even if it’s crazy the most successful people always ask HOW can we…. Good luck.

[Amanda]

Seller financing benefits them too, they won’t pay the capital gains all at once. And they could potentially pay less as their income decreases in retirement.

And they would set the interest rate, which is where they could make it affordable for you.

The only thing is, they may not want you to refinance because that pays them off.

But you might want to have that option. Worth a conversation imo.

[Janelle]

What’s their interest rate? You could buy at market price or a little under, but give them a down payment, say 100k or however much they need for their immediate plans or however much you have available for that.

Then wrap the mortgage basically, ideally with a 3-4% interest rate.

Do a 5 or 7 year balloon so they have a set date where you’d need to refinance to cash them out.

Ideally in 7 years you will have a decent amount of equity so you can refinance even with higher rates just the remainder of the loan will be smaller.

[Shannon]

Do you own a home that appreciated during the spike a few years ago and you’ll have a lot of equity to put down?

[Stef]

To me, this does not sound like an affordable home for your family.

[Author]

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