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Answers (5)
Best Answer
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3421
You are on the right track here with how to attempt structure this but the numbers just don't work out.
You can't do the purchase and have the equity loan remain for her to pay on her own. It will be mandatory to pay that in full in order for title to insure your new lender they are in first position.
When you factor in the seller closing fees, the truth is there really isn't very much equity to gift.
You can't do the purchase and have the equity loan remain for her to pay on her own. It will be mandatory to pay that in full in order for title to insure your new lender they are in first position.
When you factor in the seller closing fees, the truth is there really isn't very much equity to gift.
- Thomas Hall, "Tennessee Loans"
- Contributions:381
How much do you have available to pay towards any down payment/costs?
To limit the amount you need to come to closing the purchase price needs to be enough to cover payoff of the existing mortgages which is principal balance + interest due at the time of closing and her seller costs +the amount of equity you need to cover the down-payment. If you have some funds you may be able to make it work but you would probably need to take a higher rate to have the premium pricing pay the closing costs.
Not sure where you live in Boone County but some areas are eligible for 100% financing through GRH.
Here's a link and you can check the address on the Guaranteed Rural Housing Website.
- Spirit Messingham, "TucsonSpirit"
- Contributions:662
Please talk with a lender, if you have to get a loan talk with them first.
- Joe Cafiero, "Joe Cafiero"
- Contributions:3220
I think the numbers would work for a FHA loan. There would be enough to gift the 3.5% down payment and you could go with a slightly higher rate and have the lender pay for most of the closing costs. Not sure what they run in Kentucky. The sales price would be for $161k and about a $7,000 gift of equity.
- sammiehe
- Contributions:2
Thank you. I guess it would be best simply to rent the house from her, then.
Buying mom's house
I'm still not very clear on how a gift of equity works, but it's my understanding that she sells us the house for less than its value - in this case the $154k to cover the mortgage and equity loan - and the difference between this and the house's value is the amount she can gift us in equity to go toward our down payment. Our mortgage amount would be $154k. Is this correct?
The gift of equity in this case wouldn't be enough to cover the full amount of the down payment, and we recently had some medical expenses that blew a good chunk of our savings for a down payment. My mom has offered to take the equity loan out of the equation and continue paying that on her own, which would increase the amount she could gift us in equity for the down payment, correct? Ideally we would take care of this loan as well but she has had no luck selling in the past and given up on getting rid of the house through any other means, and she really wants to get out of it ASAP since she's already been waiting for so long.
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