i inherited a house with my brother and would like to buy him out, but i dont have money for a down payment how can i get around that on a loan.

Asked by mistyjarboe, San Antonio, TX Fri Jan 25, 2013

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Ron Thomas’ answer
Ron Thomas, Agent, Fresno, CA
Fri Jan 25, 2013
Have your Bro carry you for the Down Payment;
you could a 3 year, interest only, for example.
then, you'd need a 1st that allows that 2nd.
Many variations.

Good luck and may God bless
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you kinda lost me on how
Flag Fri Jan 25, 2013
Flag Fri Jan 25, 2013
Dale Weir, Agent, Chesterfield, MO
Fri Jan 25, 2013
The first thing that you will need to do is determine the correct price for the home. Many times in a situation like this, people get emotional about the value of the home and they have an over inflated idea of what it's worth. To keep the family peace, the individual buying the property agrees to a price that is much higher than the home is really worth as a result. The appraisal of the home should be done as part of the estate and paid for by the estate, since it's purpose is not only to determine a selling price for the home, but to determine the value of the home to ensure the estate's assets are evenly split.

The second thing that needs to happen is to double check what liens are against the home such as a mortgage, a home equity line of credit, bills from repair people, tax bills, subdivision bills, etc. (and in the process determine what liens the estate is responsible for from other sources (credit card bills, auto payments, etc). If there are none, the rest will be relatively easy. If there are, then you will need to ensure that all the liens are paid off before the home changes hands. Again, the liens are the responsibility of the estate, so they should be paid out of the estates funds, if there are enough funds. If there aren't, then you and your brother will need to discuss with a lawyer how to address the liens - both in terms of the value of the entire estate and the home. If the home has liens against it that are higher in total than the value of the home, then you will probably need to walk away, since no one will loan you more money than the home is currently worth in order to buy it.

NOW, once the liens against the home and estate are dealt with and you know the value of the home, keep in mind that if you are getting a loan to buy your brothers half of it, then you are only financing HALF the value of the home. Your equity based on the half of the home that you already own, has to be considered when the lender is determining the loan and what monies you will need. It is the equivalent of bringing 50% of the loan value to the closing table. That doesn't mean that you won't need any money up front, but it will put a twist on what you will owe, including having to pay PMI on the loan.

If your brother doesn't need all his money up front, you can ask him if he would be willing to let you pay off your portion of the home over time to him (ie he would hold the mortgage on that portion of the home). This will allow him to MAKE MONEY, since you will need to determine an interest rate and then pay him monthly, just like you would pay a bank.so he will have a steady stream of income for many years (you will have to negotiate with him the interest rate of the "loan" and the number of years that the loan will be for). He might be willing to do that for all or part of the loan (in which case his loan would be a second loan with the bank's loan being the first loan against the home). You will need to ensure that you file the correct paperwork with the county showing that he is holding the loan for you if you do this (his loan then becomes a lien against the home and has to be paid off if you sell the home before he's been paid off).

If he can't or won't hold the mortgage for you, then you need to talk to a good lender about your options. Also, check with your local HUD counselor to see if there are any special monies available for home buyers in your area (most are based on income levels) - here is Missouri, we have special monies available for first time homebuyers from HUD (the federal goverment) and from the state. Some cities have monies also. http://www.makinghomeaffordable.gov/get-started/housing-expe… is where you go to find a HUD counselor.

The bank will consider all your debt, so they will take into consideration if you have a loan from your brother for part of the purchase price or if you are using special monies.

Good luck to you.
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