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!
Let the attorneys handle the rest. In the meanwhile enjoy your home and don't sweat the rest.
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.
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.
-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!!!
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.