On Love & Liabilities
A new mom-to-be is not only growing her family but contemplating growing her financial responsibilities by helping her aging parents. Her husband is not on board with the latter. She needs our objective opinions and advice.
I’m a first-time mom-to-be, currently 7 weeks pregnant! I am little obsessive compulsive (ok maybe a lot) and found your pregnancy calendar while I was diligently researching what to expect and the best methods for getting pregnant (which of course is obvious to everyone but me) and now I’m hooked!
Here’s my dilemma: my husband and I are very blessed individuals. We share a very happy marriage filled with laughter and love. We are also very successful in our careers and make enough money to support ourselves and a future little one with little concerns.
I am very close with my family and sometimes rush to their aid without thinking of the consequences to me and my family. My parents have done everything for me, raised me, put me through college, co-signed for my first house, etc. and now they need help. They are both in their late 60s and have recently run into financial difficulties. They got caught up in the Las Vegas housing bubble and are now upside down in their mortgage. They both are retired and need to walk away from the house they love. Before I became pregnant, my husband and I agreed we would sign the mortgage for a new house for them. Now that I am pregnant, well you know, everything is different.
My husband is afraid that adding an extra mortgage will financially tie us up and cause us future issues, and I do not see how it will hurt. We are probably both right and both wrong in a very simplistic way. We would not be paying the monthly payments, my parents can manage that fine. All we would be doing is adding another mortgage to our names. My husband is afraid long-term: what happens if something were to happen to them, as financially stable as we are we could not afford daycare and a $1,000 mortgage. I hate to even think about something happening to them, but my thinking is if something were to happen to my dad, my mom would receive the social security survivor benefits and continue to draw from the 401k, if something were to happen to both we would inherit the 401k, pay off the house and either sell it or rent it.
I am so torn between listening to my husband and helping the parents who got me to where am I am. I just do not know what to do. I was hoping that writing this would make me feel better, but seeing it on paper makes me realize that I am in a no-win situation, someone is going to get hurt. Do I focus on my new family or help my parents? Is there some middle road I can take that I can’t see?
I know that you will not have all the answers but I really just need some advice and support from an outside source.
Thank you so much!
A seriously torn future momma
Let me fire a couple questions right back at you:
1) Have you and your husband spoken to a good financial planner?
2) Have your parents?
If the answer to either of those questions is “no,” then for the love of all things holy, DO THAT FIRST. Do not co-sign anything, do not pass go, do not collect $200 or any other potentially life-altering financial liability on someone else’s behalf. Forget everybody’s feelings. This is an absolute, bare-minimum must, pregnancy aside. (But also, yes, especially because you’re pregnant and everything is changing.)
A good financial planner will be able to outline (to you) all the risks of this undertaking, and will ALSO honestly assess the benefits of another go at homeownership for your parents. I understand the emotional toll that foreclosure on a beloved home can take, but I’m really wondering why they necessarily need to buy another house. Especially right away. They are in their late 60s (and you mention their financial difficulties in the present tense), so…what’s the problem with finding a nice rental in their budget? (You can co-sign a lease, if their credit is in tatters, without assuming as much risk as a house.) This really does have me perplexed. Are they clinging to a romantic belief that Homeownership is Always Better (it’s not) or see buying another house as a way to make them “whole” or “stable” again (nooope)? Are they hoping to recoup their losses in some way via this purchase? Do you trust their judgment on that call? (Especially since a 30-year mortgage would mean they’ll be making payments on this place until their late 90s. Whaaaaat.)
Look, my parents owned a very small townhouse in a very nice area. They moved there when I went to college and it was a great place for them for a few years. And then practically overnight, that house became an unbelievable burden on them — financially and physically. My father’s health started to fail and he couldn’t help my mom (who was also in her late 60s) with the upkeep and cleaning, the stairs became dangerous for him and while paying the mortgage was never a problem for them…paying for unexpected stuff like a new water heater or repairing a leaking pipe that left terrible mold in the walls or roof repairs WAS a problem. New construction flooded the very nice area over the years, so nobody wanted the older styles. Their development became primarily rentals and then plagued with short sales and foreclosures as the owners failed to rent or flip the houses. Bank-owned properties meant dead lawns and peeling paint; their next-door neighbor had severe problems with hoarding (animal and otherwise) and the family was prone to big screaming fights in the front yard.
All we (their kids) wanted was for them to sell that house and get into a nice single-level rental where they wouldn’t have to worry about maintenance, but thanks to all the fundamental issues with their once-awesome neighborhood, we knew that was easier said than done. They tried to sell it after my dad’s leukemia diagnosis and couldn’t — eventually my mom was able to sell it to an investor for much less than she was hoping for, but by that point she was so desperate to get away from the place it was hard to care. She’s now in a 55+ apartment complex that allows pets, has a pool, community center, and she loves it— especially the whole “calling the maintenance office to take care of every little problem for free” part. I wish she and my dad had moved there ages ago, together.
Anyway, I’m not including these details because I think this exact scenario will repeat itself or anything, but just to illustrate that aging parents and homeownership don’t always go too well together. If your parents have not met with a long-term financial planner — someone who will be brutally honest about the state of their finances and retirement account and who is willing to bring up unpleasant scenarios related to rushing right back into homeownership (illness, injury, loss of income, a damn tree falling on the roof, etc.) — then I think you and your husband need to tell them that the new mortgage talk is officially tabled until they do.
This isn’t just about protecting yourself and your growing family — though your own meeting with a planner should cover that — and this isn’t about hurting your parents’ feelings or being ungrateful for everything they’ve done. This is about making sure that they are not about to make (another) financial mistake. Because you love them and want what’s best for them.
(And yes, because this time, any inability to make mortgage payments or “walking away” would take you down with it. Family aside, you guys deserve a clear and accurate view into your parents’ finances and ability to pay for the mortgage, property taxes, homeowner’s insurance, etc. What if there’s an emergency and you and your husband need to obtain credit or a loan and can’t because of this mortgage? Your desire to help is understandable and admirable; your husband’s caution is not heartlessness.)
As much as you “hate to think about” something happening to either of your parents, you owe it to them to think this arrangement and all of the worst-case scenarios through, beyond some fuzzy idea that ehhh, I think everything will work out pretty okay.