Writing a Mortgage To Your Kid

May 15, 2025•5 min read

Private Mortgages Help Families Secure Their Future

Published on May 15 2025 by Unbeatable Loans Editorial Team.

This week was a reminder of how important private mortgages can be in family financing. I wrote one mortgage from a father to his son, and another from a father-in-law to his son-in-law—all within a few days. In both cases, the families wanted to provide support, but also protect themselves legally and financially.

I’ve started offering this service for just $695, less than half of what most lawyers will charge—and I handle everything from drafting the note to preparing the recording documents.

1. What a Lawyer Charges

In many states, attorneys charge between $1,500 to $2,500 for drafting and recording a private mortgage. They might include boilerplate clauses, but few will guide you through the financial strategy or explain how to avoid triggering gift tax or compromising future estate plans.

My process is streamlined, focused, and built specifically for families lending to one another. You’ll get a mortgage note, recording-ready documents, and guidance every step of the way—for $695 flat.

2. Why Record a Private Mortgage

Recording a private mortgage isn’t just about protecting your loan—it’s a strategic financial move.

Avoid gift tax: Instead of “gifting” large sums, you document the transaction properly.

Preserve estate value: If something happens to the lender, the recorded mortgage shows this was a loan—not a gift—helping with estate distribution.

Claim interest income: "Lenders" (usually a family member) can receive interest and report it properly, keeping the IRS happy. Whether you're lending $50,000 or $500,000, recording a private mortgage formalizes the arrangement and ensures that everyone is on the same page.

If you’re considering helping a family member with a home purchase or refinance, don’t skip the paperwork. Let me write and record your private mortgage—fast, affordable, and done right.

3. You Can Sell The Mortgage

Need to liquidate? You can sell your the note, the debt, sometimes called "paper" to other investors. There are marketplaces designed to facilitate these transactions, and usually the note is worth the remaining balance + a premium depending on the performance and terms.

4. Avoid tax implications

One of the most important aspects of writing a promissory note and recording a mortgage is that there is legal documentation that avoids gift tax. This documentation is a recorded mortgage by the county, and a private note, often not recorded anywhere, which shows the terms of the mortgage. These documents not only document the transfer of money, they are verifiable income for tax purposes for the lender.

🧭 Step-by-Step Guide: Lending to Your Child and Recording a Florida Mortgage

🏁 STEP 1: Decide to Lend Funds Privately

You're choosing to act as a private lender—offering your child financing to purchase or refinance a home. This gives them flexibility, avoids traditional underwriting, and can preserve wealth within the family.

📐 STEP 2: Define the Loan Terms

Sit down and agree on:

Loan Amount: (e.g., $1,200,000)
Interest Rate: Fair market or IRS AFR minimum (to avoid imputed gift tax)
Loan Term: (e.g., 15 years)
Repayment Type:
- Interest-only?
- Amortized?
- Balloon at end?
Monthly Payment Amount: (e.g., $5,000/month interest-only)
Prepayment Rights: Allow payoff early with no penalty?
Due-on-sale clause: Loan becomes due if the home is sold?
Default Terms: When is the loan considered in default?
Callable Option: Can you demand early repayment?

🧠 STEP 3: Decide to Record the Loan With a Mortgage

To protect yourself legally, especially if the loan is large:

✅ Yes: Secure it with a mortgage recorded on the property title
❌ No: You’re at risk if your child defaults or sells the property

🔐 Recording a mortgage ensures you have a legal lien and can foreclose if necessary.

🛡️ STEP 4: Decide on Lender’s Title Insurance

Title insurance protects you against title fraud, prior liens, or ownership claims.

🔹 Optional but recommended—especially if this is not your child's first title transaction
🔹 Ask the title company for a Lender’s Policy in your name. It can cost approximately 1% of the loan amount.

🧾 STEP 5: Draft the Promissory Note and Mortgage

You can hire an attorney, or use a licensed mortgage loan officer (like me).

✅ Each document should include:

Promissory Note: Defines the debt, interest, and repayment
Mortgage: Secures the note and references the property

Document requirements:

Full names and marital status of borrower(s)
Full legal description of property + parcel ID
Borrower and lender signatures
Up to two witness signatures (depending on the state)
Notary acknowledgment

🖨️ STEP 6: Format and Print the Documents

For Broward County, Florida:

Mortgage:
- Top margin: 3” blank space on first page
- Minimum 10–12 pt font
- Print on single-sided pages for recording clarity
- Include Prepared by and Return to sections
Promissory Note:
- Not recorded but must be signed
- Store the original wet-ink version securely

✍️ STEP 7: Execute the Documents

Sign the Promissory Note (Borrower and Lender)
Sign the Mortgage:
- Borrowers sign in front of a notary
- Two witnesses sign
- Lenders sign
- Notary completes acknowledgment section

🧾 STEP 8: Record the Mortgage

Give the fully executed mortgage to a title company or recording service:

They'll file it with the County Clerk of Court
In BROWARD, you would pay:
- Doc Stamp Tax: $0.35 per $100 loaned
- Intangible Tax: $0.002 per $1 loaned
- Recording Fee

✅ Once recorded, the mortgage becomes a public lien on the property.

📁 STEP 9: Retain and Safeguard the Note

Keep the original Promissory Note in a fireproof, private location.
Make digital and paper copies (but only the original can be enforced in court unless reestablished).
Optionally file a “Note Custody Affidavit” listing the holder of the original note.