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Looking to sell my investment property to my daughter and husband. They have good income - ok credit score.
Value is about $275k, owe $190K. I want to sell it to them for what I owe.
Someone told me about a gift of equity, that they come to the closing table with very little out of pocket?
Can I use the gift of equity with a 6% sellers concession to do a FHA loan?
Thank You.....
No need for FHA.
Sell it to them for $190k+costs (say $6k)=$196k with a gift of equity (over 20%) and seller paid closing costs and they can buy it from you with $0 out of pocket. Very slick way to go.
ps. Rates are awesome right now. They should lock immediately on a 30 yr. fixed in the upper 5's.
another option, call your bank and see if they allow the mortgage to be re-assigned, they will still have to qualify, credit score/income, but it would be a simple transfer of title and liens.
I was told if I sold a home to my daughter for an undervalued price like OP states, it would be considered a gift, with appropriate taxes to deal with. Same thing with re-financing it for her, and not charging enough interest. The goverment knows and watches out for such tricks...
How do you get around that...? I don't know, just what I was told when I looked into such dealings...
I am assuming it is your investment property and it will be the primary for your daughter? if so, then you can do as previously stated and up the sale sprice slightly to help her out. You can probably use FHA, but like most other loans today, she will have to prove income. They consider this a non arms length transaction due to your relationship. Most appraisers wont use this one when doing an appraisal for someone else down the line since they know there can be some "extras" in the deal.
Thanks for the advice guys - spoke to another person (on another forum) - said I can go to 85% LTV because of Seller/Buyer is family.
Found out today her credit score is $570, she had multiple late payments to a credit card. Looks like FHA is the only way to go.....
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