Before you take this step, please seek legal counsel. Questions that I have are: Why do you want to pay off their mortgage? Do you have unlimited funds to do so? Will your name be on the title? Are they transferring ownership to you? You really do need legal advice before you do anything rash. The results could impact both you and your parents. good luck
...and a few more questions: Do you have siblings? Is this considered a loan? If you proceed get everything down in writing and make sure you know the tax implications. (btw, I do not think that you can take any deductions if you are not one of the owners....but ask an attorney or accountant)
Hope - I hope you'll follow the good advice above and NOT put yourself in a financial pickle to help your parents. I don't know your age but if you're over 45 and single, your ability to save for your own retirement is JUST AS IMPORTANT as caring for your parents. Would they REALLY want you to sacrifice your financial security to help them? Don't think of your parents as they are now, think of them 20 years ago. What would they tell you?
Unless the house will be a large financial asset for you and not a drain - think about upkeep, property taxes, maintenance - then you might want to find another solution. If it will soon need a new roof, if the basement has water problems, if the windows are old and drafty, if the porch is falling off.. it might be wiser to put it in your name somehow, sell it and use the proceeds to buy something newer, smaller and one that will last YOU for a long while.
You might also consider doing a life estate, also called deed of trust, with your parents. This means that they sign over their equity in the house to you and have the right to ownership as long as they live. Once they pass away, the ownership of the property goes to you. If there's a mortgage on the home then there are other concerns. it's best to seek legal counsel regarding that matter. What's a couple hundred dollars to get the right information and piece of mind?
In some states, the life estate means that, even if the parent gets medicaide and liens are placed on the property to recoup the states expenditures, the state can't fulfill the lien when the parent passes because the death means they no longer own the asset. If one parent needs medicaide for a nursing home and the other is able to live at home, the state will not place liens on the house because the spouse needs a home to live in. They state will also consider mortgage payments from their income to provide a home for the remaining spouse.
I hope you can find a solution that's best for you and your parents. Please, please consider ALL your options before quitting your job. Those 401(K) funds will be very dear to you later and using them up now should be your ABSOLUTE LAST resort.
I wish to pay off my parents mortgage as I will be leaving my full-time job and using only 401K and pension as income, cutting my income by 50% and will get part-time work if and when necessary. Due to parents health issues I am unable to work full-time. I was considering paying off their mortgage as their residence is mine too and should something happen to my parent(s), on my limited income may not be able to meet the mortgage payment. I would use part of my 401K money to pay off mortgage. I just do not want to end up in a situation where I could lose the house. There are no siblings or relatives to consider, it is just me, mom and dad.
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You really do need legal advice before you do anything rash. The results could impact both you and your parents.
good luck
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If you proceed get everything down in writing and make sure you know the tax implications. (btw, I do not think that you can take any deductions if you are not one of the owners....but ask an attorney or accountant)
Unless the house will be a large financial asset for you and not a drain - think about upkeep, property taxes, maintenance - then you might want to find another solution. If it will soon need a new roof, if the basement has water problems, if the windows are old and drafty, if the porch is falling off.. it might be wiser to put it in your name somehow, sell it and use the proceeds to buy something newer, smaller and one that will last YOU for a long while.
You might also consider doing a life estate, also called deed of trust, with your parents. This means that they sign over their equity in the house to you and have the right to ownership as long as they live. Once they pass away, the ownership of the property goes to you. If there's a mortgage on the home then there are other concerns. it's best to seek legal counsel regarding that matter. What's a couple hundred dollars to get the right information and piece of mind?
In some states, the life estate means that, even if the parent gets medicaide and liens are placed on the property to recoup the states expenditures, the state can't fulfill the lien when the parent passes because the death means they no longer own the asset. If one parent needs medicaide for a nursing home and the other is able to live at home, the state will not place liens on the house because the spouse needs a home to live in. They state will also consider mortgage payments from their income to provide a home for the remaining spouse.
I hope you can find a solution that's best for you and your parents. Please, please consider ALL your options before quitting your job. Those 401(K) funds will be very dear to you later and using them up now should be your ABSOLUTE LAST resort.