Short accounts make long friends/Carlos Pueblo

 Short accounts make long friends/Carlos Pueblo

According to a famous Chinese proverb, even with kin brothers keep clear accounts, which explains he principle to deal with money to the other person. Our successful daughter Michelle and her spouse like to borrow money from us to build a mansion in Austin, Texas. She gets an equity loan from her rental house and they also save some fund yet still need a loan from us. I am in kind of hesitation because that investment is not necessary. Finally, Amy convinces me to go ahead. I ask Michelle to prepare a promissory note to be serve as a first lien to that house and she agrees.

All my fund is ready now and we miss the dead line of the appointment with the Travis County Clerk Office to register the mortgage. I understand that she is very busy on her regular job. I ask her to postpone our loan until I come back from my trip on November 9. She can pay her construction expanse on her own funds first. She agrees. The draft of note came in with 5.5% interest rate for 10 years and I disagree. I request a change to 3 years note of 6% interest rate and renewable at the end of the term with mutual consent. She agrees again. Amy has a talk with me and complains that I ask too much. I ask her to loan her part of fund right away and leave me alone. She doesn't dare to do it without me with her.

Michelle is like me good at the arithmetic. I know that she would use their savings first and our loan at the second and finally the equity loan from the bank. It makes sense as the concern of the interest cost concern. The current market rate for 10 years mortgage is about 7.3% which I have told her. If I let her have 5.5% on her note, I must discount my note to the other that I remind her not to take advantage of us.