Post # 1
By large sum, I mean 20K. And, by need it – it’s to help them avoid foreclosure. I was not the person asked, but the person who needs the money asked them to take a equity line out on their house for them.
I’ve always been in the camp that you give someone money and expect not to be repaid, but are pleasantly surprised when you are repaid. 20K is a lot to ‘give’ to someone who already has trouble managing their finances.
Post # 3
No no no. I would never ever take a loan out on my house to loan money to someone else.
Post # 4
I’m in the same boat as you.
Post # 5
Depends on soo many things. If we had it to give, I’d absolutely do it for my parents. Or FI’s mom. Or maybe one of like 3 friends (but we’d have to REALLY have it then… like have enough that we’d still have money in savings after the 20k). That’s about it though. I agree with you though, never lend money unless you’re willing to let it be a gift.
Post # 6
@oracle: I agree. Money also ruins relationships. I would do my best to help the person, maybe get them in touch with a credit counseling service… but I couldn’t just hand over that large sum of money and expect to ever see it again.
Post # 7
That is a lot of money to ‘give’ to someone and a lot for another person to ask of someone else…to take out an equity line on their home.
I think it depends on who it is asking for the money. If it was DH or I’s parents we would be more likely to take the request seriously, but I’m not sure if we would be comfortable lending such a lump sum. Sometimes you do what you have to do regardless of how comfortable you are with the situation. However, I think this is one of those situations where I cannot honestly answer unless I was in the position of being asked.
Post # 8
No way. Unless they were family or really close friends & even then it can destroy a relationship. However, if I had a ton of $$ to spare, I’d love to help my friends out, but if it made me go more into debt, I wouldn’t.
Honestly, giving someone $$ isn’t usually the answer when they owe lots of $$. Its like a “band-aid” that doesn’t get to the root of the issue. What happens in 6 months, when they owe more $$ to the bank & get foreclosed on anyways? Then they loose that $20k & owe the bank the other $100k (or however much). & if they declare bankruptcy, than the friend won’t get back the $20k either & it destroys a friendship. Now there ARE times when so much stuff just happens that’s not their fault, & lending $$ can help. Realistically, that friend will never pay back the $20k, at least not for many years.
I’m not saying that they’re bad people or did something wrong. I know people who owe tons of $$ & they worked hard & the economy just shot them down. What will help them more is going thru someone who can work thru the issue with them, like a credit counseling place. Getting rid of “extras” like internet & cutting back on the phone plan, if possible. Selling things they don’t need, stop going out to eat. Those are ways to save $$. I don’t know them & I’m not judging them. They may have already done this & have done everything they can. Maybe even renting out 1 of the rooms to someone else could be an option?
If they decide to do so, they should write up a contract & the $20k should definately be paid by check or money order if they want to be paid back over time. However, when lending someone $$, its best to write it off as a gift.
Post # 9
No way. If the house is going into forclosure then I would think it is beacuse they can’t afford the payments, for whatever reason. How would they be able to afford to pay you back? Life is rough sometimes, and hard, and crappy. But if they need 20K to avoid forclosure I would think they have not been paying their mortage for awhile and in turn probably not the greatest at manageing their money. I don’t even think it is appropriate for a friend to ask for that, family I could see, but not a friend. I never loan out money to friends, it destroys relationships, IMO.
Post # 10
I would only do this for my parents and brother.
Post # 11
UPDATE: Sorry I didn’t mention the relationship – it is a brother, actually. On one hand – the feeling is it will just be a bandaid. On the other, it’s family and they need help. I think the part that gets me is asking to take a loan out on the house… it’s one thing to have it in savings and another to ask someone else to get into debt to help out yours.
Post # 12
Lending big amounts of money to anyone will usually end in disaster.. My policy is i’ll lend it only if i cant afford to never get it back. This way if i dont get it back it doesnt ruin our friendship
Post # 13
Do you know why they’re going into foreclosure? Are they bad with money management? Do they have a job? Have they been making their payments, or at least as much of a payment they can afford?
Also, does the brother live luxeriously (sorry, can’t spell that!). Like, is he really cutting back on things, or is he living like he has all the money in the world?
Post # 14
I have to agree and say that I would say no. I would let me brother move in with me and get back on his feet or if say they needed food I would go and buy some groceries.
Post # 15
I would only do this for my parents, I have 2 sisters and there is no way I would take out a loan on my house for either of them. I love them, we are very close, one has a large family of her own, but still no. I would try and help in any other way i could. I still think if their house was going into forclosure, then they can’t afford the life they are leading. Live with in your means, I know there are things you can not control like being laid off and such, I have been there. But when that happens you have to adjust your spending and cost of living. If I had a large amount in savings I might feel different but I don’t think so. As you stated it’s just a band-aid. I don’t think that is the kind of help they need right now, I think they think it is, but it is not. IMO
Post # 16
If I had it to give without expecting to get it back, I would. I would not take out a loan to give it to them. The people that are in foreclosure should contact their bank to see if they can do a loan remodification. If they can, they would have a lot lower payments and the current past due payments would be rolled into the new loan. A loan remodification would probably also give them a lower interest rate too.