Gift of Equity?

View your credit file based on any of the UK credit reference agencies, or all three at once
LifeLock is the only Identity Theft Prevention Solution backed by a one-million dollar guarantee!Click here to get a 10% discount.

LifeLock Identity Theft Prevention - Save 10%

My wife and I are about to buy my mothers house. The mortgage officer told us that the "gift of equity" is the way to go if my mother is ok with it. He has tried to explain it, but I can't get it.

for instance....

buying the house at 270,000

loan amount is 270,000

mother owes 190,000 on the house

mother receives 80,000 in poket

home is valued at 300,000

mortgage officer says closing cost (about 15k) can be covered with a gift of equity.

can anyone explain this? is the equity in the house (30k) paying for the closing cost? if so, I'm not making payments on that closing cost......

thanks

Gift of Equity?

A gift of equity is the same as your mother giving you the $30,000 in cash to cover your down payment and the closing costs.

Gift of equity can only be used between imediate family members and are great!!!

The way it will work is you will buy the home for $300,000, but receive $30,000 from Mom, so your loan only has to be $270,000. It's a great way to go!!!

One problem, though...$15,000 is pretty high in closing costs (unless is includes pre-paids and you're going to have a lot in taxes due.)

Gift of Equity?

Like the 1st responder said 15k is high for closing costs. Pennsylvania, where I live, is considered a "high closing cost" state, and here the costs would not be that high.

Can you itemize your costs for us here? We'd be happy to analyze it for you!

FirstPrevious12 Next End

Gift of Equity?

Topic