Hey Money Minder,
Yo, so here’s the deal. My wife’s dad kicked the bucket and left everything to her, but zilch for her bro who was actually a stand-up sibling. She wants to split the house value with him. Ain’t no changing her mind on that, and that’s cool with me.
So, the house is free and clear. We’re renting it out to family at a lower rate, thinking about keeping it as a rental long-term. Tried getting a loan for half the value, but the offers were meh. We ain’t ballers – I’m a laborer, she’s a teacher. House is worth $286k, looking for a $140k loan. Best deal we got had a 7.5% interest, but included taxes and insurance. It’s like the rent we’re charging.
Now we’re debating – take the loan, pay tons of interest for 30 years, hope the house value goes up? Or sell, invest, and secure our retirement? Got some debts to clear, but wanna make the most of this windfall.
So, what’s the call? Take the loan and roll the dice, or cash out and invest for retirement? Appreciate your advice, Money Minder.
Cheers,
Money Move Makin’ Mike
Response from THE MONEY MINDER:
Hello There,
I understand the complex situation you and your wife are facing with the inheritance, the desire to support her brother, and the financial decisions surrounding the house. Firstly, I want to acknowledge the thoughtful and compassionate approach you both have taken in considering your brother-in-law’s well-being despite the challenging circumstances.
In evaluating whether to take a loan for $140,000 or sell the house, it’s crucial to consider your long-term financial security and retirement planning. Given the high-interest rate and the potential risks associated with rental property ownership, it may be wiser to sell the house and invest the proceeds in a diversified retirement portfolio.
By addressing the existing debts, such as the student loans and car loan, you can free yourselves from high-interest payments and set a strong financial foundation for the future. Additionally, contributing to your wife’s CalSTRS retirement plan and investing in low-cost index funds can offer long-term growth and stability.
While the sentimental value of the house and the desire for rental income are important factors, prioritizing your financial well-being and retirement security is paramount. Selling the house, settling the debts, and investing wisely can provide a more reliable path towards financial independence and peace of mind.
I commend your commitment to supporting your brother-in-law and navigating this complex financial situation with integrity. Making sound financial decisions now will lay the groundwork for a secure and prosperous future for you and your wife.
Thank you for sharing your story and seeking guidance. If you have any more questions or need further assistance with financial planning, please don’t hesitate to reach out.
Take care,
THE MONEY MINDER
