As much as you like your inlaws and get along with them, I would be very careful about having them carry the note. I’ve known of too many cases where “family help” ended up being “family involved in my affairs”. Given how low interest rates are, I’d go with a conventional loan through a bank. I’d be profusely grateful to my inlaws, but I would not tie my finances into theirs in any way.
As Rich pointed out, there are inflation issues. But there are also issues in the event there is no inflation. What if interest rates were to drop even lower? How would you feel about going to your inlaws and telling them you want to refinance? By then they might be counting on the steady income from your mortgage payments.
Also, I’d be sure to understand the implications of the transfer of the title on tax base. I believe that you should be able to assume their tax base, which would be a very good thing, but I’d be sure to read all the rules to make sure that I didn’t miss something and fail to qualify for that tax base transfer.
