Help Please! First time home buyer
 

Hey guys and gals,

Mitch here. :) my GF and I want to purchase my parents house. Any pointers on what to do. whats a good rate? I'm hoping my parents sell it for what ever they still owe on it. and possible a little more so that they can get a new place to live. I was just curious on what i would need to do i guess to get the ball rolling. My parents want to refinance the house and my gf and i want to buy it before they do it. It may take a while for me to reply but please any input is highly appreciated:thumbup:

Thanks again X'ers

Mitch

Hmm...Ever heard of "never do business with family"?...LOL...

Mortgage rate In practicality jumbo is like 7.0% 4 days ago...
You haven't given enough info. in reference to everyone who is involved in. Do your parents have a living trust set up? How long has he lived there? Info. to determin net proceedings, etc. Assuming GF stands for Girl Friend not Grand Father, you should also consider proper vesting in case things get sour.
It sounds like the first step would be get your parents permissioin. Secondly,
consult professionals who are familiar with local laws such as a good estate lawyer, an accountant, etc.. You probably wouldn't want to involve realtors but you should still use an escrow company.
Good luck. Most cost effective thing will be living with your parents. :)

First, never buy a home with a girlfriend or even a fiance as both of these can split pretty easily and leave both of you with dificult paperwork. Purchase a home yourself. If your credit is good, 700 or better score and your DTI (debt to income ratio) is low you should have no problem securing pretty good rates on the home. If you are willing to go interest only, you will get an even better rate.

The thing you need to do now is talk to a lender and figure out how much you can borrow and get pre-approved to that amount. When it actually comes down to buying a place, make sure you have a lawyer or realtor involved as there are about 2 inches of documents that need to be signed.

And this is just the quick and dirty information, there is a ton more to it.

Purchasing your parents home is not the same as purchasing a home from a unrelated 3rd person. Assuming you are your parents' heir, the tax consequences of an poorly planned transaction can create issues for both you and your parents.

You must consult with either a tax accountant, a estate planner, or an estate or tax attorney to discuss various ways this property can be passed to you, while imparting tax benefits to both you and your parents.

You make no mention if your parents are going to sell you the house at less than fair market value. If they do, the difference between the sales prices and FMV can be construed as a gift which would be counted against your parents' allowable gift and estate exemptions total ($12000 per year) and creating a taxable liability. Also, a discounted sale price would mean that you would pay more capital gains when you sell the house later.

Your parents have the option of selling you the house at FMV, but carrying the note at a discounted rate. I forget the name of this rate, but it is rate that is set by the IRS and it is below current mortgate rates. You must make payments to your parents as per the contract, but your interest is deductible as in a standard mortgage. Your capital gains upon sale would be reduced because you are paying FMV instead of a gifted price. If your parents' original intentions were to gift you the home, they could reduce your payments by gifting you in cash yearly up to their $12000 gift limit, thus avoiding a gift tax.

But the bottom line here is that you are your parents' heir. Take the steps needed to protect your parents and yourself. And if you are going to get into a contract with your GF, you're better off marrying her first or make her pay rent.

While the advice you have received so far is very good, A BMW message board is probably the last place you should be getting advice from on this very complicated matter. Go find a good mortgage banker, accountant, financial advisor and lawyer (that's 4 separate people) and listen to everything they have to say.

And don't buy a house with your girlfriend.

EVER.

Good luck have fun.

VF1:
Solid advice from JonK, Mr.Wagner,ADude & Gresch, imo.

You gotta cough up a lot more info and details and this may not
be the place to do that, or get detailed replies; that idea of yours
is a bit more complex than car loan shopping.

And, unless your 'Rents don't need the dough or, are offering "charity"
to you, I doubt many would offer to "sell" at payoff number.

Go find some local Xperts and GL.
mD

That pretty much sums it up right there :thumbup:

:withstupi

Your advice is quite good. Especially the last warning. :p