For ownership, does it matter who pays for house, or just who is on deed?

Asked by Candace Schnurr, 49058 Wed Jun 29, 2011

both my son & I are on purchase agreement, cash, but Title to home will be in my name only. If he goes out next month and buys his own house, will he be considered a "first time buyer" for mortgage purpose?

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Randy Pereira, Agent, Helotes, TX
Wed Jun 29, 2011
Hi Candace,

It sounds like the "auction" just wants to make sure there are no loop holes that will get you out of buying this property... especially since your son is the one that won the bid. If he is the purchase agreement you can count on his name being on the Title. Best bet is to have it removed, like everyone else said, to avoid any confusion at closing.

The term "first-time home buyer" doesn't always mean someone who hasn't purchased a home prior.
Example: According to the IRS, if you owned a property, but have not lived in it (aka your principle residence) in the past three years… you still qualify.

hope everyones advice has helped..

all the best,

Randy Pereira
ULTIMA Real Estate
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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Wed Jun 29, 2011
You'll want to make sure that a lender would be OK doing the purchase for your son who would be buying the home from you, as it's considered a "non-arms length" transaction and can be viewed with extra scrutiny since it's one family member buying from another. I am not sure what down payment assistance program you are looking for, perhaps it's MSHDA, and I believe it's OK with buying from family but MSDHA's programs are offered through mortgage lenders, so it'd actually be the mortgage lenders who are going to give your son approval (I am just assuming it's MSHDA since it's the biggest one in Michigan - it could very well be other down payment assistance programs).

The reason I bring this up is because you immediately buy a home, and then your son will immediately be buying it from you, and that situation is called a "property flip", which if it's done properly can be just fine - for example if you aren't selling it to your son at a price above what you paid for it, then that situation would be a lot more comfortable to a lender than if you were selling it to your son at a higher price than you paid.

So if part of your plan *HAS* to be that your son can purchase it from you right away, you'll want to make sure his situation is fully pre-approved before you close on the home with cash.
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Candace Schn…, Home Buyer, 49058
Wed Jun 29, 2011
he was purchasing home at a cash only auction with intent on getting a mortgage. I showed proof of funds from my accounts. Since he won the auction, he found out he could qualify for a program for first time home buyers. Since it is my money buying house, we want it put in my name and I will sell to him, but may not allow his name to be taken off Purchase agreement, even though house will be deeded to Me only. Closing on "cash only" purchase is coming up and we want to do it so he can take advantage of loan offer.
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Shanna Rogers, Agent, Murrieta, CA
Wed Jun 29, 2011
Hi Candace,

If your son is not going to be on Title, why even have him on the purchase agreement? If he's on the purchase agreement, when the deal closes, he will be on Title. Take him off the purchase agreement and you won't have to 'worry' about any possible confusion in the future.

Shanna Rogers
SR Realty
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David Burnham, , Washington, DC
Wed Jun 29, 2011
If you are paying cash and your son is not going to be on the title, I am not sure why he would be on the purchase agreement. If he is on the agreement, then he may not be considered a first time home buyer.

Either way, if there is a first time home buyer program he would like to qualify for, you would need to read the details to figure out how to qualify. The definition of first time buyer is not universal and I could see your situation being very grey.
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Gerard Carney, Agent, Spring Hill, FL
Wed Jun 29, 2011
Yes he would be considered a First time buyer since his name is not on the Deed. But you better remove him from the purchase agreement or he will be recorded in the title. the contract should be in your name alone or it will be recorded that you both were involved in buying the home!
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