Zillow Advice: Home Buying - Buying House from Parents http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ Zillow Advice | Zillow Real Estate This is a great excuse for ... http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ This is a great excuse for your parents - and you - to have a CPA.<br/><br/>Tax events are triggered when money or real estate are in motion, and everybody's financial situation is different.<br/><br/>Congratulations, and - all the best! Fri, 03 Jan 2014 16:21:00 GMT http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ 2014-01-03T16:21:00Z Option 1. Buy the home for ... http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ Option 1. Buy the home for $237,000 and get a gift of equity for $37,000. Your LTV will be at about 85%. You can finance in PMI and literally get into the home for $0 out of pocket if you want. Keep in mind, closing costs will be extensive depending on where in NY you are.&nbsp;<br/><br/>With option 2, HELOC's are typically adjustable, and you better bet those rates will be creeping up shortly. Initially, you would probably get a better rate or close, but over the life of the loan you are much better off with option 1.&nbsp; Fri, 03 Jan 2014 15:10:00 GMT http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ 2014-01-03T15:10:00Z WOW, this one is a hard one ... http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ <div>WOW, this one is a hard one to answer, perhaps an accountant might be the best person to ask. In my experience, I say that option one is cleaner and safest.&nbsp;<div>Putting aside the tax ramifications.<div>&nbsp;Loans are becoming very difficult to qualify and fund. My question is if you go with choice 2 and after you get the deed to the home, you can not get the loan, then what?<br/><div>I believe choice one is safer, this way you can make sure you pay off your parents. The downpayment will be gifted by your parents (I do not think you have to report it) what about closing cost?&nbsp;<br/><div>There is technically $37,000.00 in equity that your parents have, closing cost and prepaid on a home like this are or could be close to $10,000.00 plus your down payment. On an FHA, &nbsp;your parents could give you up to $3.5% down payment and up to 6% in closing cost.<br/><div>Sitting down with a lender and figuring out what kind of loan you are qualified for might be good, since from the $200,000.00 that your parent need to NET, you have to calculate the down and closing cost, and that will be the total purchase price.<br/><div>On an FHA loan, &nbsp;you are looking at more or less:&nbsp;<div>On a $237,000.00 Loan (lets say you want to finance the appraisal value)<div>3.5% down is $8,295.00<div>6% for closing cost that will cover, finance cost, taxes, insurance (prepaid) title insurance, etc. you are looking closer to $10,000.00 to $14,000.00 ($14,200 is the max allowed)<br/><div>That leaves about $14,000.00 to either finance this amount less, or if the home needs any remodeling, updating, etc. &nbsp;You guys can do a bill for this amount at closing payable to someone else other than you since lender WON'T allow this, to be paid to you, BUT it is OK if paid to someone else like a handyman or contractor or cousin with a different last name, etc.<br/><div>Good luck and hope your find the best outcome.</div></div></div></div></div></div></div></div></div></div></div></div> Fri, 03 Jan 2014 15:08:00 GMT http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ 2014-01-03T15:08:00Z I'm pretty sure that you ... http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ I'm pretty sure that you have an identity of interest sale in option 1. &nbsp;There may be guidelines concerning gift money. &nbsp;You probably want to check with a local lender on that one.<br/><br/>Option 2 sounds like it will be the best for you. Fri, 03 Jan 2014 14:54:00 GMT http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ 2014-01-03T14:54:00Z How great is that getting ... http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ How great is that getting to buy your parents home! &nbsp;With option #2 the interest rate may be higher than if it was purchased with a traditional 30 year mortgage. &nbsp;It may be best to talk with a loan officer and have them look at your situation and help explore all your options. &nbsp;Congratulations on the new home, have a great 2014.<br/><br/>Thank you.<br/><br/>Shawn Korby, Keller Williams Fri, 03 Jan 2014 14:50:00 GMT http://www.zillow.com/advice-thread/Buying-House-from-Parents/523164/ 2014-01-03T14:50:00Z