Financing in 03051>Question Details

brandoda22, Home Owner in Hudson, NH

Can I borrow money from my parents to pay off my current FHA loan to get 80% equity to qualify for a credit union refinance?

Asked by brandoda22, Hudson, NH Sun May 26, 2013

I currently have an FHA loan that I would like to get rid of by refinancing with a credit union. They have deal for a 12 year loan at 3.5% for no fees but need to have 20% equity in the home. I want to borrow money from my parents to get to the 20% equity mark to refinance. Is this ok or will the bank want to know that have a loan with my parents?

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Hi Brandoda,

You can do this one of 2 ways.

1) Pay down the balance of your current FHA mortgage prior to the refinance so when the new lender pulls your pay off for the new mortgage, it shows a lower balance.

2) Borrow the money from your parents & fully disclose the terms on repayment to the credit union & bring the money to closing.
0 votes Thank Flag Link Tue May 28, 2013
If it is a gift than yes, if it is a loan you will need to disclose it to be within the law and they would have to assess if you could afford to pay it back within their stated ratios. Ask your loan officer to explain to you how it works
0 votes Thank Flag Link Tue May 28, 2013
Brandoda,
The lender will want to know about any major payments or cash flow through your accounts. If your parents "give" you the money, you have a chance. If it's a loan, they will likely change the terms to reflect a second lien on the property. This is normal.
My suggestion is to discuss what you are hoping to do with your credit union and be open about your options. You may also want to see what a mortgage broker can provide I love credit unions, but they are often very limited in what they can offer. A mortgage broker will have significantly more options available to accomplish your goals. Best of luck.
0 votes Thank Flag Link Sun May 26, 2013
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