In late 2023, Ruth and her husband approached his parents with an idea to build a multigenerational home together. His father had suffered a stroke in 2008 and was in poor health. Being present for him in his final years mattered, and pooling resources made the most financial sense for everyone.
The couple was upfront about what they could afford. Ruth and her husband had a hard ceiling of $1,500 a month for a mortgage payment. His parents agreed to cover whatever exceeded that. Construction costs ran over, as they often do, and the final mortgage came out to $3,600 a month. His parents would cover the $2,100 gap. Nothing was put in writing — just a family agreement and a shared goal.
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Both families contributed $100,000 each toward the down payment and building costs for the $660,000 home. They moved in September 2024.
Sadly, Ruth’s father-in-law had passed away in June 2025. By August, her mother-in-law met someone new and moved in with him. She first said she’d keep paying her full share. By January 2026, however, she cut her contribution to $1,500. And last month, she said she would stop paying entirely — but she still wants her cut when the house is sold.
Ruth called into The Ramsey Show this week asking what she can do, and Dave Ramsey didn’t hesitate: “The house is gone. Sell it immediately.” (1)
Ramsey suggests Ruth’s next steps
With only 18 months of payments behind them on a $660,000 house, there’s very little equity built up. The sale proceeds may not fully cover what both families put in — meaning one or both sides could walk away with less than their $100,000.
Ramsey’s instruction on dividing the proceeds was to deduct every dollar the mother-in-law promised to pay above $1,500 that she didn’t.
“Deduct what she promised to pay, everything above $1,500 originally, and whatever she doesn’t keep her promise on; deduct that from her half of the proceeds to make the deal fair,” he suggested.
On the emotional side, he also recognizes that this deal cost the couple a lot of money.
“The way I would quantify that,” he says, is that “whatever money I lost, whatever tears I have shed over the stupidity of this deal was worth it for that precious six or eight months, and to be there when Pop passed. That was the cost of that.”
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Why Ruth’s arrangement failed — and how to avoid the same trap
Ruth had no written co-ownership agreement. That single gap is what made her situation unrecoverable the moment her mother-in-law decided to stop paying.
Under a joint mortgage, every co-borrower is equally responsible for the full payment — regardless of any private split they agreed to among themselves. If one party stops paying, the lender comes after all borrowers equally.
Rocket Mortgage explains that, if someone stops making their share, “the lender can penalize and come after any of the borrowers for the money, since they’re all equally responsible.” (2) Miss enough payments, and every co-borrower’s credit suffers.
A co-ownership agreement, drafted before closing and reviewed by a real estate attorney, is what governs what happens when circumstances change. It specifies each party’s monthly contribution, what triggers an exit, how buyouts are calculated and how proceeds are divided on sale.
Ruth had none of that.
Experian encourages families entering joint mortgages to put the rules in writing before they sign — including what happens if one party wants to sell or vacate. (3)
Ruth’s experience is actually quite common. According to the National Association of Realtors’ 2025 Generational Trends Report, 17% of homes purchased in 2024 were multigenerational — the highest share since NAR began tracking the data in 2013. (4) A 2022 Pew Research Center report also found that about 59.7 million Americans lived in multigenerational homes, as at 2021. (5)
So if you’re considering it, do these three things.
1. Get a co-ownership agreement before you close.
Have a real estate attorney draft one that covers each party’s monthly contribution, what triggers an exit, how buyouts are priced and what happens to proceeds on sale. The Mortgage Reports recommends including a buyout clause or first-right-of-refusal so no one is blindsided if someone wants out. (6)
2. Make sure you can carry the mortgage alone.
Ruth’s ceiling was $1,500. The mortgage was $3,600. She could never have covered it without her in-laws, which meant she was always one life event away from this. Before signing the deal, ask if you can handle the full payment if the other party walks away.
3. Treat it like a business deal.
The people you trust most are the people with whom you’re most likely to skip the paperwork. That’s exactly why the paperwork matters more, not less. As Ramsey put it, when you have a bad feeling about a deal before you sign it, listen.
“When the bell rings, the bell’s ringing,” he said. “Listen to the bell.”
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
YouTube (1); Rocket Mortgage (2); Experian (3); National Association of Realtors (4); Pew Research Center (5); The Mortgage Reports (6)
This article originally appeared on Moneywise.com under the title: A Tennessee couple built a $660K home with family — now Dave Ramsey says they need to sell it immediately
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
