Private Mortgage Financing


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Questions about private mortgage financing through a family member?
I am interested in propositioning my grandparents to buy a home using their cash, and me pay them back. I am aware this can be setup using an escrow service, and establishing financing terms. The current AFR is 4.44% for long term Feb. 2010 loans. Therefore a mortgage rate of 4.5% would be acceptable for this scenario. While paying my mortgage back, is my interest tax deductable? Will my grandparents be taxed on the interest received as income? If I dont deduct my interest on my taxes, would they still have to pay income tax on the interest received? Does anyone have any tips on the best way to set up a private mortgage scenario? Thank you

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Questions about private mortgage financing through a family member?
I am interested in propositioning my grandparents to buy a home using their cash, and me pay them back. I am aware this can be setup using an escrow service, and establishing financing terms. The current AFR is 4.44% for long term Feb. 2010 loans. Therefore a mortgage rate of 4.5% would be acceptable for this scenario. While paying my mortgage back, is my interest tax deductable? Will my grandparents be taxed on the interest received as income? If I dont deduct my interest on my taxes, would they still have to pay income tax on the interest received? Does anyone have any tips on the best way to set up a private mortgage scenario? Thank you "Realtor" - of course you are biased on this issue becasue it takes away from your "chain of profits". let me explain something. There is no taking advantage of anybody, and my FICO is 740. The point of this sort of financing is to give a family member the 4.5% interest instead of an evil bank. And a cash buyer can scoop up a property in SoCal faster and cheaper than a buyer relying on financing.

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