Property transfer from family member...good credit...low cash for down...what are my best options??

Question

Hello and thanks,

I have a fair-good credit score of (650), but having been focusing on repaying debt, so I really have no cash on hand for a down pmt-especially as prices have gone up. I make a very good income and have been at my job for 7 years, and paying up to $3K mortgage would not be a problem. While I was to start saving for a down, a very close family member wants to help me out & sell me a house as a partial gift. As it stands, about 280K are owed on a 350K mortgage for a house appraised at 400k. Ideally, I would like to buy this house with no down, and maybe get some cash back for improvements. I am just beginning the process, and will consult a mortgage broker soon, but seeing your answers prompted me to ask and perhaps get some valuable insight. Can you provide any thoughts on this? Is this realistic? Would a second mortgage be required? Would a credit line on the house value be a possibility? Thank you. I appreciate all your comments and insight.

Answer 1

There is usually programs for first-time homebuyers that could really help you. Ask your local banks about them. Also check with your local Housing Development Fund. Some states have programs for first-time homebuyers that require no down payment and often a second mortgage to cover costs.

With good credit and the ability to pay a large monthly payment should help you in your venture. Good Luck!!

Answer 2

I am a loan officer and have worked many of these scenarios before. Since the house would be sold by a family member to you, they can give you a "gift of equity" that can be used as a down payment. Let's just say the house appraises at $400k and they want to sell it to you for $350k. They can give you the $50k as a gift of equity and that can be used as your down payment.

Purchase Price: $400k
Gift of Equity: $50k
Loan Amount: $350k

They can also give you a seller credit to pay for your closing costs. You legally cannot get any cash back at the closing as the buyer. However, you can always do a credit line on the house after to get the cash you want.

The gift of equity is a great way to qualify for a better program because you are not doing 100% financing. With a seller credit you can also structure the deal so your closing costs are not paid out of pocket. This is not only realistic, but happens all the time. If you have any questions, let me know and I hope this helps.

Answer 3

Yes there is a way for you to get cash out for improvements. I am a mortgage loan officer with a national bank and can loan in all states and just closed a transaction just like this.

Have your relative add you to the title to the property, then you can do a cash out refinance to give them their equity and get the cash you need.

Some lenders will tell you that your position on the title has to be "seasoned" (you have to have been on title for some time before you could do this), we don't require it.

Doing it this way means no down payment, no closing costs out of pocket, the cash you need, and great FNMA interest rates.

I'd be happy to help you.