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My wife and I want to buy my mother's house and still let her live in it.

My wife and I want to buy my mother's house, since she can no longer afford it and still let her live there. The payoff is $128k. We need to know what type of loan to get. She is over 50 miles away near the Chesapeake Bay and we do stay down there. Would we get a second home loan or an investment loan. My mother will be paying a minimal rent. The second part of this question is since we only need $128k to pay it off (the house is worth $175k), what amount do we apply for and do we need a down payment, since the $128k is way below the value? I should add that she is 80 years old, so refinancing is out..
  • May 15 2013 - Richmond
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Answers (4)

Justin is correct. It would be treated like primary residence. 
  • May 16 2013
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Quite likely you can apply with her to refinance it as a primary residence utilizing the Fannie Mae provision that allows your income to help qualify for a parents home when the parent cannot qualify on their own.
  • May 15 2013
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Profile picture for Go Huskers
" I should add that she is 80 years old, so refinancing is out.."
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What leads you to believe refinancing out for an 80 year old?
  • May 15 2013
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Try talking with your local bank or credit union and see what suggestions they have. Perhaps your mother will sell you the house for $160k and gift you $32k (20%) as a down payment, then you can get a conventional mortgage for $128k that will pay off her existing mortgage.
  • May 15 2013
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