How Do You Borrow Money From Family Or Friends?
• Find a lender. Consider relatives, friends and associates who trust in you and want to see you buy a home. You will have to pay interest (and can deduct your interest payments if the mortgage is properly documented,) so find someone who can benefit from a steady stream of payments. • Agree on loan terms. Pick and agree on the loan terms you will use. Standard terms include an amount, an interest rate, the term, repayment type, repayment frequency. The interest rate used on intra-family mortgages averages 4.7%, but you and your lender should discuss alternatives you each have and agree on the rate that provides a win-win situation for you both. • Create formal documents. You will need a promissory note to document the loan. If the loan is to be secured by the real estate, you will also need a mortgage (or a deed of trust, depending on your state.) You can purchase basic versions of these documents online and in bookstores. However buying a home is a complex transaction and you should
