My parents want to sell their house and travel. I want to purchase the house from them. They will sell it to me for $80K and the house is valued at $250 +. I would like to get a mortgage of about $120 - 150 K so I can do some repairs / fix up to the house. What are the downfalls of doing this? and what penalties will there be for this type of sale? Your answers are appreciated.
2006-06-15 04:12:04 · 9 answers · asked by desire4reallove 2 in Business & Finance ➔ Renting & Real Estate
Your real issue is your parents selling the property WAY under value. This will cause some lenders to balk.
Why not just have your parents add you to the title? Once this is done goto a lender who does not require seasoning (legenth of time you have owned the home) and do a cash out refinance with just you on the loan? Once this is done pay off mom and dad and they can quit claim off the title and bang, you own it.
I see this as a much easier way to handle this than trying to make an argument to the lender that this is not a bail out for your parents or a huge gift.
If you would like to discuss this further drop me a line.
Kevin 866-562-6838 x 106
kruorock@firstratelending.com
www.firstratelending.com
2006-06-15 19:16:45 · answer #1 · answered by Mudisfun 3 · 1⤊ 0⤋
First things first, your credit score is ok, but not where it could be, the first step I would suggest is getting with someone servicing your area, a mortgage consultant possibly, and have your Full Tri-Merged Credit report pulled, there may be issues on it that you can clear up quickly (30-90 days) by setting payment plans or disputing items that do not belong there. Some of my cients have gained 50-60 points on their credit score in 3-6months, which brings them to a new level of options and program availability. Just waiting for your credit score is not an option imho!!, that could take 7 years or more! be Pro-active in this regards.
There are many lenders that do allow cash-out on purchases, however, you could refinance this house rather than purchase it. If your parents would be willing to QuitClaim you onto the deed. You could then refinance rather easily and be in a much stronger position.
I do not see any pitfalls to doing this, as long as you are committed to maintaing the property and mortgage payments.
In regards to possible penalties, the only thing that comes to mind would be a marginally higher interest rate when compared to a 700+ credit score, this could be bought down by paying points up front to your mortgage broker (which could be included in your financing so it doesn't come out of pocket), but depending on your program choice you may be looking at refinancing again in the next 3-5 years so it wouldn't be a show stopper.
So, check your credit, see if theres anything you can clear up immediately; talk to you parents about putting you on the deed in order to do a refinance, instead of a purchase, and find a competent mortgage consultant that services your area for good advice on programs and options that are available to you in order to get the best deal possible.
2006-06-16 05:59:34 · answer #2 · answered by ReggieWjr1 4 · 0⤊ 0⤋
Most lenders will do 100% financing with a fico score above 580. The loan to value is based on the purchase price regardless of the appraised value. You can refinance after you purchase the home and take cash out with a new first mortgage to do all the repairs. If you're in California I can help you.
2006-06-15 06:07:41 · answer #3 · answered by Martin 2 · 0⤊ 0⤋
What penalties could their possibly be? If the house is valued at more than 250K and you are purchasing it for 80K and have 120 to do repairs, good for you!!! By putting in the $$ you will be increasing the value of the home.
You did not say what state the home is located.
Good Luck to you!!!
2006-06-15 04:31:23 · answer #4 · answered by wanninonni 6 · 0⤊ 0⤋
You can't take cash out on a purchase, so you not be able to get funds to do repairs. Also, alot of lenders have problems with a house being sold under market value. That, and your credit score is not that great. You may have a hard time qualifying for a loan.
2006-06-15 04:16:52 · answer #5 · answered by Hot Pants 5 · 0⤊ 0⤋
I am a loan officer for a mortgage company in Lansing, MI. You can get cash back on a purchase. I just did a loan with a 600 credit score and they got cash back. If you want to contact me feel free to email or call 877-LOAN-103 and ask for Josh.
2006-06-15 07:38:42 · answer #6 · answered by Wishkah 2 · 0⤊ 0⤋
My fisco score is at 600, most mortgage lenders will turn me down more because of my credit history. Best is to wait until your fisco score is at 700, where most lenders are likely to approve your mortgage loan for larger funds. They won't hand you down the loan at the fisco score of 600, so it would be very difficult to get a mortgage loan.
2006-06-15 04:17:27 · answer #7 · answered by Zero Hunter 2 · 0⤊ 0⤋
I do not believe there will be any penalties. but you may want to check with the Bank...
your Credit Score is 600 its okay but not the greatest. the bank or mortgage company may ask for 10-20% down payment.
2006-06-15 04:17:14 · answer #8 · answered by Oracle 3 · 0⤊ 0⤋
Where are you located, and a Loan Officer could help you find a Lender if you'll work with them to get it done. That's me if you are in my area. :-) There are several Lender's willing to help if you can fulfill their criteria; stability on job, home site (renting), income, monies for down payment, earnest money (show willingness to purchase), and a means of showing that you'll be able to handle a house payment by having monies on hand. Lenders like to have atleast two months of payment in an account, (checking or savings), with the down payment setting for several months. If you'll not in my area, this is still good information for future use. Please e-mail me with your telephone # if in southeast Houston, TX
2006-06-15 04:51:00 · answer #9 · answered by msthinkpositive 5 · 0⤊ 0⤋