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Mother wants to sell me her house via gift of equity. She lives in Rhode Island.

My mother lives in Providence and wants to move near me.  She wants me to buy the house from her because she is willing to sell it to me at price that would make it worth my effort. 

I really have to interest in ever living in the house, and I would need to rent the house. Finding tenants is not a problem, the problem is that if I do this, I need it to be painless and do not plan on putting a dime into the whole process. I have family who live in the area and they are committed to keeping tabs and dealing with any repairs in my absence.

I have owned investment property in the past, but have since sold them.

Are there any mortgage programs that would allow me to purchase the house from her? It's been appraised at 150k a little over a year ago, Zillow says 115k, but my mom would be willing to do a gift of equity all the way down to what she owes on her house which is in the neighborhood of 40k, but she would prefer 70k so give her downpayment money on new space near me. My credit score is in the in mid 650's, due to recent loans that I have acquired(I wasn't expecting this to come-up), and  with no lates/issues for the last 4 years. ( I did do a deed-in-lieu back in 2008 but have since purchased another house). Is this a viable option for me?

At most, I can likely contribute close to 5k to the transaction, but I rather not put anything down.
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September 08 2012 - Washington Park
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Answers (3)

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Truthfully I am not, but mostly because I do not think it's possible.

 As far as selling, she wants someone from the family to benefit when the market recovers and would like to house to stay in the family, and I respect that aspect of it.
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September 08 2012
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Sounds like you aren't particularly enthused about this option, why not work with your mother to sell it?

If you decide you wish to buy it, please work with a real estate attorney.  There are also tax implications  (for your mother) if your mother gifts you more than the allowable annual gift as defined by the IRS.  

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September 08 2012
Due to the miriad legal issues involved in your write-up, your safest bet is to have a local lawyer (where the house is located) oversee the transaction. If won't cost you a whole bunch, but certainly make you feel a lot better knowing that someone responsible is tackling all the legal issues.

Raheel Shahzad, Attorney, CPA, Real Estate Agent
Lombard, IL
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September 08 2012
 
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Mother wants to sell me her house via gift of equity. She lives in Rhode Island.
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September 08 2012 | 3 answers
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