Families: Finances: Giving a Helping Hand

Experts say it's risky, but when done right, a loan between family members can benefit everyone

When four of Roger Jusseaume's nieces and nephews bought new homes last year, they didn't go through a bank or other institution for financing. Instead, Jusseaume, an Arizona entrepreneur, was more than happy to lend them the money. While few relatives can afford to be that generous--after all, there aren't many people who have the means to provide $500,000 worth of mortgages--loans between family members are common. Financial planners and family counselors often caution against the practice, but the Federal Reserve estimates that 2.1 million U.S. households owe money to individuals, including friends and family members. These loans may seem appealing,...

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