I want to know if I should do a home equity, regular mortgage, or other options?

Question

My mother just passed away, and left the house that I am living in to my brother and I. What would be the best way to finance the half value owed him?

Answer 1

If you want to buy him out, home equity may be the simplest (may not be the best) option./

Answer 2

I assume you were living in the house with your mother. Firstly you need to have a valuation on the house so that you and your brother agree on a price that you will pay to buy his share. If you have not discussed this with him as yet, you should. If your brother does not need the money then probably the best way is for him to lend you the money to buy his share, with him holding a mortgage over the property. This should all be done with the help of a solicitor and at 'arms length' terms where  the interest rate should be the market rate. You then pay him the appropriate amount each month ( principal and interest ). If you go down this path then you need also to have a separate agreement covering what will happen in the event of your brother needing his money or dying.  You should  insure your brother's life for the amount he lends you so that in the event of his death you have the money to pay out the debt to him.

The other way is to borrow the amount you need to pay him out ( plus a little bit extra for unforeseen expenses and repairs to the home), as a mortgage. Get the mortgage over the longest term, with lowest rate of interest you can find, without all the 'bells and whistles' such as drawback facilities etc . This will keep your repayments as low as possible. If you cannot afford the repayments on a mortgage of this amount, then you may have to sell the house in order to settle your mother's estate.  

Answer 3

For matters pertaining to equity the authority that I go to is Marian Snow - best-selling author of "Stop Sitting on Your Assets". She talks about how to let your equity work for you, how to become your own bank, and secure your financial future. I got a lot of new ideas, and now view my money and financial management in a different way.

Preview the book here -- there's a lot of vital information you can't find anywhere else. I suggest too that you make a small investment on the book. It changed my total outlook on investments, mortgage, equity and personal finance.

http://www.stopsittingonyourassets.com/M...

You can contact Marian through her personal blog here:

http://mariansnow.typepad.com/assets