Home Buying in 28078>Question Details

Tom Kirchner, Renter in 28078

I'd like my parents to buy a home for us since they have great credit.Then I'd like to purchase it from them.What's the best way to

Asked by Tom Kirchner, 28078 Wed Sep 29, 2010

achieve this? We have enough income to buy a house but haven't had a long recent track record of good income.We also have credit card debt to pay down so I figured it would be very difficult to qualify for a loan,My parents have great credit so I was hoping they could purchase the home in their name and then sell it or transfer the title to us with as little hassle as possible from banks,mortgage companies etc.What are some options to helping us do this?

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Tanya Donaghy’s answer
Though I would like to first say that I am in agreement with everyone else here that has pointed out that you and your parents should discuss all of your option with a tax accountant and real estate attorney, I would like to add a couple more things...

Another option that doesn't appear to have previously addressed is for your parents to purchase the property and then lease the property back to you with an option to buy clause. It can be spelled out to show that a portion of any lease payments that you make will be applied to the purchase price. This can be either set up as fixed monthly amount or as a formula that would match the principal to interest ratio that they will be paying monthly on their mortgage.

As for the option of you and your parents both being on the deed and you and your parents or just your parents taking out the loan, there is one thing that I don't believe has been considered here... that is that once your parents transfer their share of the title to you it becomes a taxable event. It could potentiall work, but I would be very careful about this and discuss it at great length with a tax accountant and real estate attorney before entering into this kind of arrangement.

Best of luck to you!
Tanya Donaghy
Solutions Realty
0 votes Thank Flag Link Wed Jun 29, 2011
Obtaining seller financing (parent financing) could be an option. Speak with an attorney and financial advisor for advice. It also doesn't hurt to try and get prequalified on your own.
0 votes Thank Flag Link Tue Jun 28, 2011
It is important to see a lawyer and a good mortgage lender.
From there it should be relatively simple.
0 votes Thank Flag Link Thu Mar 10, 2011
You might consider bypassing working with your parents, and do a lease-option, or buy with seller financing.
0 votes Thank Flag Link Sat Oct 2, 2010
Matt taylor gave you the best advice below. The only thing I might add is that perhaps they could be co-signers on a loan for you.
0 votes Thank Flag Link Sat Oct 2, 2010
Talk to a good NC mortgage broker and have everything checked & rechecked by a good NC attorney who specializes in real estate. I think the best route to take is to stay put, work on improving your credit score and save up for the downpayment. Again, a good mortgage broker can give you very specific instructions on how best to up that credit score. There is also a wonderful free agency that can help you improve your credit score. They have lots of experience and have helped lots of folks. If you would like the contact info for the agency, please email me vvaughan@cbunited.com or call 704-450-0386. Sorry I don't have the info with me right now! Good luck!
0 votes Thank Flag Link Fri Oct 1, 2010
That explains why a father is the best lending institution second to none. The only qualification required is love and and respect .
Let the attorneys handle the rest. In the meanwhile enjoy your home and don't sweat the rest.
0 votes Thank Flag Link Thu Sep 30, 2010
I think the best thing, Tom, is for your parents to discuss this with their accountant and attorney.
0 votes Thank Flag Link Wed Sep 29, 2010
Guys no disrespect but there are a lot of complicated answers here for a very uncomplicated problem.

1. If your parents can pay cash and owner finance it for you this would be great. Most people do not have this luxury and if you did I doubt you would be asking your question on this forum.

2. The owners of the mortgage must be on the title of the home. So dont try to let them buy it and put your name on title. It wouldnt be right for either of you and the lender will not like it either and may call the loan due. Most lenders put a "due on transfer/sale" clause in their mortgage paperwork. Bottom line, dont do it.

3. Your best option for financing is to utilize an FHA loan. You can qualify with their income and credit, and only your credit needs to be reviewed. Their income can offset your debt. We only require a minimum 600 credit score. Great pricing, great ability to refinance the loan in the future to remove your parents.

4. The next best option would be for your parents to buy the home as an investment property and allow you to live there and pay the mortgage. They can report the rental income on their tax returns but after taxes and mortgage interest ect. I doubt that they would have any additional tax liability.

Again, no disrespect. Thanks everyone.
0 votes Thank Flag Link Wed Sep 29, 2010
Tom,

You are very lucky to have such wonderful parents who will help you out. My parents did the same for us, and we carry on the tradition with our kids. AS the other agents mentioned, there are several issues to consider that I won't bother repeating. It is very important that you be on the Deed even if they are on the mortgage. In a sense, your parents "own" the mortgage while you "own" the deed for the house. They may need to be on the deed--just make sure that you are also.

Speak with a lender who has access to and understands all the programs available to you. One way to find this is to go onto the NC HFA (NC Housing Finance Agency) website and look for their lenders. Most of those lenders will have access to various programs.

Your parents should speak with an accountant about the tax implications for them and the best way to maximize the tax benefits.

Good luck, call if you need help.
Web Reference: http://CrazyVivHomes.com
0 votes Thank Flag Link Wed Sep 29, 2010
There will be some things to think about.

-Type of financing: If they have a home and it happens to have a mortgage, they will need to qualify for two mortgages based on their income. If they qualify, it will probably be a conventional product that will require at least 5% down if not more. Are you going to pay the down payment?

-YOUR financing: You will still need to save for a down payment as well as closing costs and that down payment will need to come out of your pocket so the monthly payment that you will pay for your parents will need to allow you to save some money for when you buy the home.

-Title: This is important to plan out beforehand in the unfortunate event that someone passes away suddenly before you buy the home. You may want to talk with an attorney before purchasing to make sure you are protected or at least, avoid complications with an estate.

Taxes- Make sure to explore the tax implications of your parents selling the home and any earned income while they own the home. Are you going to pay them rent?

May not end up being complicated but these are a few things you may want to think about It may be bettter for them to help you pay some stuff off then you buy the home yourself!!!

Good Luck
0 votes Thank Flag Link Wed Sep 29, 2010
Hi Tom, your parents could pay cash for a house. Then, they could be your 'mortgage holder' and basically sell you the home as a "seller-financed" arrangement. If they have to get a mortgage to buy the house, you can't buy it from them unless you get your own loan. Which doesn't solve the problem of your debt. Tom, my office is in Huntersville (Birkdale). If you want, I can connect you with a mortgage broker who can talk through some options with you and your parents.
Web Reference: http://www.joycepoole.com
0 votes Thank Flag Link Wed Sep 29, 2010
Transferring the title after the loan is in place is typically not allowed and could result in the bank calling the loan due.

What I would recommend is to utilize an FHA loan with either you or your spouse on the loan and using your parents as "non-occupying" coborrowers. You can do this and legitimatley both be on title and the loan. Eventually as your credit and income scenario improves you can refinance and take them off of the mortgage and title.

If you would like more informaiton please call or email me.

Matt.taylor@mortgagefamily.com
704-207-8625
0 votes Thank Flag Link Wed Sep 29, 2010
Your parents will not be able to transfer title to you unless they have no lien against the property or have the lienholder's agreement. If they have the money to pay cash, then they could buy a property and then become your "lender" by selling and financing your purchase. They would maintain a lien/ mortgage that you would pay them. Hope that helps!
0 votes Thank Flag Link Wed Sep 29, 2010
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