{"id":5470,"date":"2017-02-07T14:04:51","date_gmt":"2017-02-07T14:04:51","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=5470"},"modified":"2020-07-13T22:32:47","modified_gmt":"2020-07-13T22:32:47","slug":"gift-of-equity-family","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/gift-of-equity-family\/","title":{"rendered":"Gift of Equity FHA Loan Rules. Buyers Could Use Equity to Buy from Family!"},"content":{"rendered":"

Are you buying a home from a family member?\u00a0 Family transactions may have pluses for both the buyer and seller.\u00a0 A major benefit to buyers is a gift of equity.\u00a0 So what is a gift of equity?\u00a0 It is a little known rule which allows equity in\u00a0a family member’s\u00a0house to be used as the buyer’s down payment.\u00a0 Basically, the seller passes along part or all of the equity in the house to the buyer.\u00a0 FHA<\/span><\/a> guidelines, among other mortgages, allow the seller to pass along equity as a gift.\u00a0 But,\u00a0it must be\u00a0done correctly!<\/p>\n

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Buyer Benefits of a Gift of Equity Purchase<\/h2>\n

Finding the right house and then learning everything about it could be a daunting task.\u00a0 But what if you have known the sellers and the property forever?\u00a0 On top of that, what if the seller will help you out with down payment?\u00a0 This could be quite the win-win!\u00a0\u00a0Although there are wonderful low to no down payment financing options, a gift of equity scenario could be quite the plus.\u00a0 Additionally, the seller may even pay for the buyer’s closing costs.\u00a0 Traditional sellers cannot provide a down payment to the buyer.\u00a0 Thus, potentially a no money down purchase is available for the buyer!\u00a0 Plus if there is a higher amount of gifted equity, it could even lower the mortgage insurance.\u00a0 Therefore a lower monthly payment.<\/p>\n

Click Here for the Best First Time Buyer Advice<\/a><\/h2>\n

Do you have a potential interest in buying a family member’s house?\u00a0 Give us a call.\u00a0 You need a lender and loan officer who can walk you through the correct steps for gifts of equity.\u00a0 Even if you are receiving a monetary gift from family, there are strict procedures for this.\u00a0 So get the gift steps up-front by talking to our expert loan officers today.<\/p>\n

Do you still want to look at other houses?\u00a0 Ask us for a referral.\u00a0 We work with great realtors in many markets.\u00a0 Also see which realtors do a great job in your area on such resources as Zillow<\/span><\/a> or Trulia<\/span><\/a>.<\/p>\n

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Why Would Sellers Give a Gift of Equity?<\/h2>\n

Besides the fact the buyer is family, there are seller benefits to passing along the equity in the home as a gift.\u00a0 First of all, family transactions typically do not involve a real estate agent.\u00a0 Therefore the seller saves up to 6% in commissions paid.\u00a0 Rather than pay a commission, how about pass along that as equity or down payment to your family?\u00a0 Plus, there may be the benefit of a quicker sale rather than waiting for a buyer.<\/p>\n

While calculating the price and the seller’s net, there are costs to keep in mind.\u00a0 These costs vary by state so ask your lender or real estate attorney.\u00a0 Typical seller side costs could include the following:<\/p>\n