Why use National Family Mortgage? There are plenty of reasons!
Prevent IRS scrutiny. The current IRS annual gift tax exclusion is $14K per person. In order for an exchange of family funds to be considered a legitimate loan and not a potentially taxable gift, you must properly document the transaction as a loan and also report earning interest at a rate equal to or above the minimum rate required by the federal government, called the Applicable Federal Rate (AFR). Even if you document the loan, but report earning less than the appropriate AFR, the IRS may impute the interest as income and also view the forgone interest as a taxable gift.
National Family Mortgage registers your loan with the appropriate government authority. This will allow your borrower to legally deduct their mortgage interest payments from their federal tax return – just like with a bank mortgage. (They cannot legally deduct these interest payments on non-registered loans – even if the money is used to purchase a home.)
Proper documentation sets clear expectations and prevents future misunderstandings. If anything happens to you, your registered mortgage documentation also protects the interests of your other children or family members who could be affected by the proper accounting of the loan. Our optional loan servicing platform reduces awkward conversations, provides year-end tax statements for the IRS, and keeps everything business-like.
A Strong Investment Vehicle
What are your bonds or CDs paying these days? Invest in a loved one and earn a solid return. From down payment loans, to 100% financing or refinancing, or home equity loans, we have a solution that fits!
Monthly Income Stream
Your National Family Mortgage will generate a recurring monthly cash revenue stream from payments by your borrower. This is an attractive feature relative to many other investments. Reinvest the money or spend it however you choose.
You can rest assured that your investment is protected with a registered mortgage lien as filed with the proper government authority. This can be especially important when an unforeseen event occurs, such as the death of the borrower, or a borrower’s divorce.