I am having a hard time understanding what a gift of equity is, and how it works. I just talked with a mortgage company, and they tried explaining it to me, but I do not know why I would want to do this.
I am buying my brothers house, for $113,000. It is apprasied at $125,000. The difference being $12,000. Now, the mortgage company, said, I can have my brother give me the $12,000 as a \"gift of equity\", and rolling that price into the mortgage loan. Why would I want to increase the loan to $125,000, if I can purchase the house for $113,000?
Everything I search on talks about taxes and tax laws, but I do not understand the basics of this first. Can someone explain please?