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Guest

I'm new here but found some similar talk of my situation. Currently my wife's parents own a house valued at $175,000. They want to transfer / gift / sell the house to us for an amount to clear what they owe on the house. That is about $30,000. What is the best option for completing this transaction? Let me know if you need more information. THanks.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Gary,

Welcome to the forum.

I think your wife's father can simply quitclaim the property to you and you pay off the money what he is needed. Now regarding quitclaim deed, you have to notarized the deed and record it in the county recorder office

Feel free to ask if you have any further questions.

Best of luck,
Larry

Guest

Now that I had time to read on this website I think the gift of equity makes more sense. Any more information for my scenario with a gift of equity (letter)

Jessica · Posted: Tue Jan 15, 2008 10:00 pm Post subject: RE: gift of equity

Hi Gary,

This is not a typical buying/selling transaction because you're paying much less than the value of the parents' home. It's similar to a gift of equity wherein the grantor (the parents) transfers a portion/whole of their interest in property/equity to the grantee (it's you here) at no costs or at a price much lower than the home value.

Thus, what you need doing here is to tell your parents is that, they use a grant deed to transfer their interest in the home to you. I hope the home is free of any mortgage/liens otherwise you will have to use a quitclaim deed.

We've earlier had discussions on this topic. Take a look at one such discussion on Gift of Equity to get a fair idea of how it works.

In case you have further queries, please feel free to ask the community.

Regards,

Jessica

ckalvesmaki · Posted: Wed Jan 16, 2008 6:15 am Post subject:

I'm new here but found some similar talk of my situation. Currently my wife's parents own a house valued at $175,000. They want to transfer / gift / sell the house to us for an amount to clear what they owe on the house. That is about $30,000. What is the best option for completing this transaction? Let me know if you need more information. THanks.

Hi Gary and welcome to mortgage fit......Basically you want to structure the loan and purchase contract so that you don't have to pay MI...mortgage insurance.....There are some costs and fee's associated with the selling of real estate so.....Here is what I would suggest.....

you write a contract.....with your parents selling you the house for 50k....They will then "gift you" 10k...ie 20% for your down payment........and an additional 1500 for your closing costs....net to them before paying taxes current and there portion of title fee's is 38,500....After all is said and done they should net right at what they owe on the house.

jbarto65 · Joined: 04 Nov 2007 Posts: 622 -0.15 Dollars($)

Why don't they just sell you the house for the amount that they owe on it, then they could pay it off and have it transferred into you and your wifes name, would this work?

shane · Posted: Mon Jan 21, 2008 6:52 pm Post subject:

jbarto, it could, but then Gary would be getting a loan at 100% LTV with mortgage insurance... the way Cedric outlined would be a better way to structure the purchase because Gary would then have a 20% down payment, easier qualifying, etc.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

Hi Gary T,

I would suggest purchasing the home with a gift of equity as your down payment. There is no transfer of funds with this type of transaction. You are simply using the existing equity in the property to satisfy the down payment requirement. This way you can get the 30K to pay off your parents and even more if you wanted to do some improvements, etc.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Gary,

As you are only paying $30000 to your parents where as the property value is %175000 it will not be considered a purchase but gift of equity as Jessica has mentioned above.

Feel free to ask if you have any further questions.

Best of luck,
Larry

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

You don't need a gift of equity. Just have your parents add you to title and then apply for a refinance for the 30,000 to pay them off. After the loan closes, or at closing, just have them removed from title with a quit claim deed. The title company that does the refinance can also do this for you.

Guest

What is the best way to go about refinancing our home through my parents? We are trying to significantly lower our monthly payments, as our income has reduced by nearly 50% in the five years since we purchased the home. They are able and willing to pay off our mortgage with cash ($249,000 at a current interest rate of 5.875%), and hold the note for us to repay them. What interest rate are they obliged to charge? What creative and legal options do we have?

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