My son needs a short term loan of 150k to buy a house. As soon as he sells his existing house he will repay the loan. I have thought of 4 ways to raise the money. First I could liquidate some investments to raise the money. I could also take a margin loan on the equities. A home equity loan would provide me with the money, and finally I could borrow from my whole life insurance policy.
Any thoughts?
I was in a similar situation in the 1980's when I had purchased a new home before my previous home was sold. The Realtor I was working with arranged a short-term "bridge loan". That might be another option, but I believe it might be expensive.
I suppose I would try to figure out what is the least costly way to do it. If you were thinking of liquidating some equities anyway since the market has gone up, maybe that is a good choice, assuming you can handle the capital gains. If you have fixed income investments that are not paying too much, maybe that is an option.
fdhs_runner - I know this is a dumb question but why not get his own loan? Why do you need to be a part of it? That's how most of us do it.
I did the bridge loan one time. I could "afford" it, it was doable, but as tom says expensive and then......well if something goes awry....selling a home can sometimes stretch out. He would take the bridge loan, which in reality is a HELOC.
I could be wrong but the other loan options are gut churners.
I think it comes down to your personal level and really what % of your AUM $150K is it. Might be a drop in the bucket or 10%+.....
Is he new to the existing home, i.e. no home equity or is he under water on this? With home equity, enough to cover the down payment, and with a good relationship with his note holder, he should have no problem with a reasonable bridge loan or some derivative of it. Has he investigated those options?