Posted on: 22nd Nov, 2010 11:02 am
My father-in-law is thinking of selling us his house for what he owes on the mortgage. He owes around 95,000, value of the home is around 225,000. Would I be able to take out an FHA loan for around 140,000 to do some home repairs? I don't think I want to go the 203K route, as it seems very annoying with so many people involved. I’m just starting to do my research. Thanks
Hi MarlonF!
Welcome to forums!
If there is no other mortgage on the property after you buy it, then you can take a FHA loan in order to finance the home improvements.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If there is no other mortgage on the property after you buy it, then you can take a FHA loan in order to finance the home improvements.
Feel free to ask if you've further queries.
Sussane
Thanks for the reply.
So would this require 2 seperate loans or the single 140,000 loan. Does the FHA loan require the loan to be for the exact sale price? Again thanks for your help.
So would this require 2 seperate loans or the single 140,000 loan. Does the FHA loan require the loan to be for the exact sale price? Again thanks for your help.
Hi Marlon,
You will have to check out the FHA loan limits in your state and then take out a mortgage accordingly.
Thanks
You will have to check out the FHA loan limits in your state and then take out a mortgage accordingly.
Thanks
The value of the home is $225,000
Your father is willing to sell to you for the balance of the mortgage which is $95,000
There is no need to do an FHA mortgage
Do a conventional loan with a gift of equity of 20% so you do not need PMI and purchase the house for enough to get the cash you need for repairs. Your father will get the cash. He will have to gift it back to you after closing
Example:
Purchase for $180,000
Purchase Contract with Dad states purchase is for $180,000 with a 20% gift of equity, which is $36,000
The contract also states Dad is giving a seller concession of $5,000 towards closing costs and prepaids
Mortgage is $140,0000
AT closing Dad's $95,000 mortgage is paid off.
That leaves $45,000 from the mortgage you get
$5,000 of that toward closing costs
That leaves $40,000 left to Dad after closing.
Dad gives you that money after closing for your repairs.
Your father is willing to sell to you for the balance of the mortgage which is $95,000
There is no need to do an FHA mortgage
Do a conventional loan with a gift of equity of 20% so you do not need PMI and purchase the house for enough to get the cash you need for repairs. Your father will get the cash. He will have to gift it back to you after closing
Example:
Purchase for $180,000
Purchase Contract with Dad states purchase is for $180,000 with a 20% gift of equity, which is $36,000
The contract also states Dad is giving a seller concession of $5,000 towards closing costs and prepaids
Mortgage is $140,0000
AT closing Dad's $95,000 mortgage is paid off.
That leaves $45,000 from the mortgage you get
$5,000 of that toward closing costs
That leaves $40,000 left to Dad after closing.
Dad gives you that money after closing for your repairs.
Thank you very much.
This looks like the best option. Also from researching taxes related to gifts and gift of equity, it won't effect us. Great. Thanks
This looks like the best option. Also from researching taxes related to gifts and gift of equity, it won't effect us. Great. Thanks
You are welcome
Good luck
Good luck