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Djude83, Home Buyer in

Paying Cash for a HUD

Asked by Djude83, Wed May 15, 2013

We just put an offer on a HUD home. We will be owner occupant, I was told though it does not matter where the funds come from as long as we are listed in on the occupant form. My father in law will be paying it with cash. Getting nervous - we bid a little over the asking price and just afraid things will fall through.

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It could fall through. Is your father in law on the contract? The proof of funds needs to match one of the principals to the contract. There is a way to get a little over 40,000 into your account from his without triggering gift tax. Please before this transaction goes further talk to an accountant about your plan.
0 votes Thank Flag Link Thu May 16, 2013
So the bid has just went in, but no contract yet. My only issue is that my father in law purchased a HUD home as owner occupant for himself within two years. So we dont mind him being on the contract - just not sure how it works.
Flag Thu May 16, 2013
Was your offer accepted? If so, you may want to talk with a lender about financing. You see, with interest rates being so low these days it almost doesn't make sense to pay cash for anything. The break even point of what you would save every month versus what you will pay in finance chages is so small that it is not much benefit to use cash.... To give you and example. For every $10,000 in purchase price, your payment would only be $44 per month. So for $100,000 loan amount you will only pay $440 per month (principal and interest) but you will always have taxes and insurance so we aen't going to factor those in..... Do the math, how many months of paying $440 per month will it take to add up to the $100,000 loan amount???? That is just over 227 months or 18.93 years..... Now just imagine what you could have done with that $100,000 had you kept it in your pocket for 18 years? Do you see where I am going with this? Cash is king right now, keep all that you can.
Now, if you in-law is paying cash because you are not credit worthy to get a loan, then obviously this debate doesn't matter. Good luck. If you need an informed lender to answer these questions please email me and I will introduce you to a very good lender who knows even more than I do about finance. Any way you slice it, good luck with your bid!!!
0 votes Thank Flag Link Wed May 15, 2013
Cash is the only option. Thank you.
Flag Wed May 15, 2013
Whoever told you that was incorrect. The government tracks funds of all transactions over $10,000. Your father could have to claim gift funds on his tax form if he is not on the title. In order to be on the title with a HUD purchase, he should have been a buyer on the offer. If not, there are other implications that come in to play. Did you not discuss this with your agent in advance?
0 votes Thank Flag Link Wed May 15, 2013
There is no issue with him bring on the title if that is what it takes.We have thrown around with a agent for awhile. So we are just working with one starting yesterday. Bidding ends tonight. So I am doing research and sending him a ton of questions.
Flag Wed May 15, 2013
That is not quite correct. At least one of the buyer's names needs to be on the proof of funds statement you are sending in to HUD or your father in law needs to go onto the purchase contract with you. Either way is fine. If there are multiple buyers on the contract, only one of them is required to be owner occupant.
0 votes Thank Flag Link Wed May 15, 2013
The "in law" is providing the funds - we/he have no issue in putting him as a multiple buyer or on the contract. He will not be living there, but wants to buy the home for his son. He can't purchase a HUD because he has bought one in the past 24 months from what I read.
Flag Wed May 15, 2013
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