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Kershaw : Real Estate Advice

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  • Home Buying6
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Mon Mar 3, 2014 asked:
Tue Jul 16, 2013
Jay Faulkenberry answered:

My name is Jay Faulkenberry with Heartland Realty of Kershaw. We are a local real estate company and would love to help you in your transition. I always recommend having a buyer agent to help you with the process of a real estate transaction because buying a home is one of the biggest investments you will make. If you would like, you can give me a call at 803-475-6639 which is our office number. We would be more than happy to help you in your search for the perfect place in Kershaw. I have been in Kershaw 40 years and love this town and area. Just give us a call if we can help.
Jay Faulkenberry
Heartland Realty
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Tue Jul 6, 2010
Anna M Brocco answered:
Your best source of advise as it relates to your personal situation is your tax professional and or tax attorney--For accurate information, consider a consultation with either or both, regarding IRS qualifying codes. ... more
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Tue Jun 22, 2010
Grace Hanamoto answered:
Hello Sheep and thanks for your post.

So long as you are the owner of the home, your name (and your name alone) should be on the deed of the home. After all, the money being used to buy the home is actually YOUR money since it part of a loan made to the daughter. I am going to assume that the loan would not be fully discharged with the purchase of the home, so speaking as a former accountant, my suggestion would be to keep this situation as "clean" as you possibly can.

First, the loan between you and your daughter should be "memorialized" in writing in an informal promissory note. For example, "Daughter owes Mother $100,000, signed Daughter, dated June XXX, 2010."

Now, let's assume that the home you're purchasing is $75,000. If your daughter and son-in-law buy a $75,000 home for you, then you would acknowledge payment of $75,000 against the outstanding $100,000 promissory note. This means they still owe you $25,000, but now, their payment for the home is duly acknowledged. On the deed, however, you are the owner of the home--again, it is really your money being paid back to you that is supplying the funds for the loan.

The only problem occurs when the home is purchased by your children using a loan. In this case, the loan is taken out by the daughter and son-in-law AND the lender will want the bank and the children's names on the deed. If this is the case, then the payment you should acknowledge toward the daughter's loan should be just the downpayment for the home, and your name will also appear on the deed. Ownership can be split based on contributions toward the home purchase. For example, a home with a sales price of $100,000, in which your daughter and son-in-law put down $25,000 (part of the original $100,000 they owe you--using our example above) would result in a deed showing 25% ownership of the home in your name and 75 percent ownership of the home in your daughter and SIL's names. At the same time, you would show payment toward the daughter's debt of only $25,000 (the amount of the downpayment). The kids would be solely responsible for their mortgage, but would also retain their 75 percent ownership. In the meantime, however, they would still owe you for the remainder of the payments toward the original $100K loan made to them for their home. If you choose to pay the mortgage on the new home yourself, then their names should NOT be on the deed, but they would still owe you for the remainder of their $100K loan from you.

Finally, the one word of caution I can impart to you is that financial entanglements between family members are best avoided at all costs. Some of the most complicated and destructive financial battles occur within families over money, and, while the intentions at the beginning are good, most of the time decisions are made without legal or accounting assistance or counseling this becomes kindling for a family sized "bonfire" of complaints at a later date. If you and your family members choose to buy a house together, work with an attorney and accountant to discuss and protect your assets and the assets of your family, and to have, in place, contracts that will spell out precisely how the asset is to be treated in death or divorce (between the children), so that you do not inadvertently find yourself without payment of the original loan and without a home at the same time!

Good luck, and protect yourself first!

Grace Morioka, SRES, Former Accountant, CID Manager/Consultant
Area Pro Realty
Santa Clara, CA
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Thu Jun 25, 2009
Dana Schuster answered:
Actually you cannot have owned a principal residence in the last 3 years. For example if you own a house that you have been renting out for the last 3 yrs and you have been living in a rental yourself you would qualify. This person does not qualify on the basis that she lives in the mobile not that she owns it. ... more
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Tue Oct 14, 2008
Cindy Kidd answered:
Hi Erica,
I agree with everything Scott said. There is one additional thing I want to point out to you. Make sure that you not only get yourself qualified before you delve into this, but make sure that the homeowner is credit worthy also. Many sellers are offering lease/purchase options but are in a tight credit crunch themselves. Make sure they are going to be able to hand over clear title at the end of the option term.

Another site to check is I don't know if they have houses available in your area or not, but they are investors who offer rent to own.
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