Answers (1)
- Kyle Pursley, "Kyle Pursley"
- Contributions:77
I would speak with another lender based on the information you were given thus far.To answer question one, here is a link that helps explain the impact of credit inquiries on your credit score:
http://www.myfico.com/CreditEducation/CreditInquiries.aspx
As far as the gift of equity is concerned, your parents should not have to bring any cash to closing because, as you pointed out, who would that money be going to? The house would just have to appraise high enough for them to gift you the twenty percent after paying off the existing lien and they would sign a gift of equity letter. They are pretty much just selling you the house for less than what it is worth.
I am not familiar with the exemption rule you talked about, so I will leave that question for someone who can speak more intelligently about it. I would suggest consulting an accountant to find out how the asset's cost basis would work for you, as well as the capital gains implications for your parents.
Best of luck!
http://www.myfico.com/CreditEducation/CreditInquiries.aspx
As far as the gift of equity is concerned, your parents should not have to bring any cash to closing because, as you pointed out, who would that money be going to? The house would just have to appraise high enough for them to gift you the twenty percent after paying off the existing lien and they would sign a gift of equity letter. They are pretty much just selling you the house for less than what it is worth.
I am not familiar with the exemption rule you talked about, so I will leave that question for someone who can speak more intelligently about it. I would suggest consulting an accountant to find out how the asset's cost basis would work for you, as well as the capital gains implications for your parents.
Best of luck!
Is the information I was given accurate?
I just spoke to a rep. from my current big name lender and the information provided has left me confused.
He told me:
1. He has never heard of a borrower being able to shop for mortgages with multiple lenders in a 30 day period without it impacting their credit score as dings for all those inquiries. I thought you got 30 days to shop and the credit was impacted as a single inquiry despite multiple lenders checking your score.
2. He told me that the 80/20 loan I was planning on my parents' home (via gift of equity) would require them to bring cash for the 20 percent to the closing. I told him I thought that if the house appraised at 300K I was under the impression that they signed a gift of equity letter and I take a loan for 240K and it counts as an 80/20 since the lender's appraiser has just confirmed the market value. He said no, seller (parents) have to bring cash to close. I don't even understand who he thinks they would give that cash to in that scenario.
3. This is more general. I am under the impression that with an average 681 (of the two middle scores for my husband and myself) and an excellent debt to income I could purchase the parents house pretty much as above and that given that the deed transfer is exempt in my county in transactions between parent and child, and especially if I chose to waive mortgage escrows (though really I would like them to be a part of the mortgage, one payment is just easier) I can close without a huge closing cost. I understand that there is always some money that needs to be placed on the table but the gift of equity is in lieu of down payment. Given that selling my current home is going to hurt.
So, what's your take?
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