My father in law is 72 years old and wants to give his house to his daughter (my wife) with his Will. However, he was looking into a reverse mortgage because he is on SS and is getting to where he cannot perform the carpentry work he has always done for extra income. He owes $31k on his home valued at about $91k (from tax roll only but is close). He has asked me to look into purchasing the home for the payoff thereby extending the mortgage to reduce his costs. He currently pays just short of $800mo at 10% when he bought in 1986. He is not concerned about the equity because he wants us to have the house when he passes away. What he is after is to minimize his expense as much as possible so he can live on SS more comfortably. Lenders don't seem to like small loans like the payoff amount. We discussed at great length and were thinking I could buy it at $60k. The existing mortgage would be paid off and the remainder would be given to him as the seller which he would give to us and we would pay off our automobiles - roughly $20-25k (essentially rolling those into the mortgage. Then he would rent or lease from us at $400 mo and we would have the mortgage payment of 6-650 (inc taxes and Ins). So instead of car payments we have mortgage and he gets the reduction he is after. This also takes care of the house ahead of time as far as his Will.
Does this seem feasible? Are there wierd caveats we are not taking into account here? The loan is only 55-65% LTV. Is there a better solution?