Home Buying in San Antonio>Question Details

Fulcherp, Home Buyer in San Antonio, TX

I and my 3 siblings have inherited my mothers house. I would like to buy it. Can my 25% ownership be considered the down payment?

Asked by Fulcherp, San Antonio, TX Wed Apr 21, 2010

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A lender requires the down payment to secure THEIR part of giving you the loan, so if you were looking to buy the 75% value of the home, they're still going to want that security.

Buying from siblings can be a complicated affair - emotions can get in the way and turn south quickly. You also want to be sure everything is done with the a lot of attention to the legalities of such a purchase.

For instance, you would not qualify for any sort of tax credit (your 25% ownership precludes you, as does your relationship to the sellers). These are things you would want to discuss with a lender and your Realtor (r) or a qualified real estate attorney.

There are also issues of title that should be looked at - can anyone make claim to any of your siblings 25%.

If you're a vet, there is the potential for no downpayment (although there are other fees) and FHA loan would require a minimum 3.5% down payment.

Whatever you do, make sure the buyout agreement is ironclad and speak with a local lender about the potential purchase - if you need one, any of the agents here could recommend several. I would also suggest a title search prior to buying it to ve sure no one outside of your siblings can lay claim to the property - even a minor stake could make the purchase more difficult.

Hope that helps!

Matt Stigliano, Realtor (r)
RE/MAX Access
(210) 646-HOME
1 vote Thank Flag Link Wed Apr 21, 2010
I will check guidelines again, but to enhance what Bob said, the guideline had always clearly stated that buying out of an ex-spouse or co-heirs is considered a rate-term refinance, not even a purchase. Your 25% would be your equity, so you would have to finance 75% of the value of the property, and could probably add in the closing costs as well. As long as you are not getting any money back, it would still be a rate term, and I would assume you would remain under 80% loan to value.
0 votes Thank Flag Link Thu Apr 22, 2010
I agree with Bob M; his experience mirrors mine. Another alternative to qualifying for new financing is to buy out your sibs using seller financing. Definitely use a title company to close this deal.

If you 4 jointly own this home free and clear, then you could help your sibs to sell the note which will cash them out with a lump sum payment. If otherwise, then you could let the seller note season for at least 12-24 months, and refinance to cash out your sibs. Your sibs would receive more money from the latter option, but they'll receive it later. Whereas they'd receive their money at closing from the prior option, but they'll receive less.
0 votes Thank Flag Link Thu Apr 22, 2010
good morning....i have closed a deal such as your's.....it dates back some time, but it was straight forward enough to use the inherted equity of one of the siblings to secure financing in lieu of a downpayment...since deed transferred, it was considered a sale, even though the purchaser actually had an ownership interest by inheretance...the other siblings agreed to establish a sales price sufficient to cover some of the closing costs and pre-paids.i'm sure not all such transactions go that smoothly..as matt indicated below...title can usually clear with the help if the executor and the courts..i suggest you pre-approve just like any other transaction with a local lender.....determination of financing will be based upon the usual stips, like income, credit, job history..etc, etc...and if the home will be owner occupied or used as an investment property...
best regards...
bob mcclure-
first preferred mortgage- southfield, michigan...
0 votes Thank Flag Link Thu Apr 22, 2010
As usual, Matt S has provided a very comprehensive response.....you will need to visit with an attorney.
0 votes Thank Flag Link Thu Apr 22, 2010
You definitely need to speak with a lawyer well versed in probate matters and real estate. Be sure you take a copy of the probate orders unless probate has not closed. If not closed, discuss this with the attorney handling the probate along with your siblings.
0 votes Thank Flag Link Wed Apr 21, 2010
This would be best answered by an attorney. Typically you would buy out your siblings share and then have each of their ownership interests in the property transferred to you. While this sounds easy in theroy, things do not always go as assumed.
0 votes Thank Flag Link Wed Apr 21, 2010
Probably not. You will need to check with your lender.
Typically you will need some type of cash in the deal.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Apr 21, 2010
Bruce Lynn, Real Estate Pro in Coppell, TX
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