Here are two of the options my sister and I have beed discussing. I copied and pasted it from one of our emails. This is her explaining it to me. Any feed back on both of these options and any others are appreciated Thanks Dave
Private mortgages aren't reported to credit bureau so it won't build credit to my knowledge. Although if it can build it - that's a real good reason to do it. The benefits to the first is equity ownership is clearly defined at the deed level. However the draw back is there are fees to file the deed and the mortgage. Plus need to draw up multiple different documents. The other drawback is that if you pull out there is a legal process and foreclosure fees that will need to be paid. Although we could write the mortgage where the deed is held in escrow to maybe avoid some of these.
The second option benefit is that there is no legal process or foreclosure fees. No mortgage recording fees etc. The drawback for you is ownership is defined as whole ownership by 401k. There is a Contractor agreement to perform services for 1/2 of the equity. So the Contractor, (you) could put a lien on the property to ensure your payment at time of sale. An additional benefit would be that the 401k could pay you for your services in the amount of 1/2 the equity and keep the property as a rental. Basicly scenario one - is giving JenDen 1/2 ownership before work is performed by using a mortgage against the property to protect 401k interest in the JenDen 1/2. Scenario two gives ownership to 401k with ownership by JenDen earned as work is completed and secured via the option to place a lien.
