Taking over the parents’ mortgage is risky proposition

Dear Helaine: My husband's parents recently asked my husband if he and I would be able to take over their mortgage payments when my mother-in-law retires in just over a year. My father-in-law no longer works due to a disability.

The mortgage has 20 years remaining on it. While we could cover the monthly mortgage payments today, we are concerned that any number of issues could arise over the course of 20 years that would interfere with our ability to continue payments.

My husband and I are both approaching 40 with no debt, but our savings are not much more than emergency funds. I only recently paid off my student loans, and we are now planning to spend the next few years saving for a down payment for our first house. We live in a very expensive region, which is the place where we can most readily find work; my in-laws' home is in another region of the country entirely. We also plan to start building retirement savings.

My husband's parents have offered to leave the house to us instead of his two siblings, but it seems uncertain what kind of value we will ultimately realize from this outlay of cash, aside from the value of keeping my husband's parents in the house, which we'd both like to have happen, if possible. Is it unwise of us to be taking over the payments? Are there alternative options? — Unsure

Dear Unsure: No, no, no. Do not do this.

I understand your inlaws' desire to remain in their home, but if they can't afford the payments, they should put it on the market and use the proceeds to relocate to a residence that's in their budget.

The number of things that could go wrong if you and your spouse take on the mortgage is stupendous. How would you guarantee they would leave the home to your husband? Would they make him a joint tenant with right of survivorship, or are you just relying on them to keep their word about the ultimate fate of the house?

Can your in-laws afford the upkeep, or will that ultimately fall to you as well? What happens to your in-laws if you or your spouse lose a job and you suddenly can't afford their mortgage? They will likely need to sell and sell fast. That won't be a good outcome, either, especially the older they get.

In addition, I don't think you and your husband can afford to take this on. You've all but said you have — at best — limited funds set aside for retirement. You both need to get working on that, and taking on this house in hopes of owning it one day doesn't qualify. You deserve to own a home of your own — and I mean one that you can reside in, located in the city where you live.