Real Estate Home Mortgages/purchase house from girlfriends father
My girlfriend has lived in a rental that her parents own for the past 6 years. We have decided to purchase the house and property, do some remodeling and then sell in 12-15 months, basically a flip. I have quite a bit of equity from the sale of my house (30K). I do not wish to use this at all or very little as I will need to use some for cash to do the remodel myself. (sweat equity) My credit score is 680 and this is what would be used. My options:
$205K purchase, fha 30yr loan, pay the down at 3%, closing costs and funds approximately $11K out of pocket. Interest rate of 3.25%. Mortgage broker states that we can buy UP the rate to 3.875% and have no out of pocket expense. Is this correct?
$215K purchase price, with $10K gift of equity does the same thing.
Credit Union states they do not do the FHA but can do a 97% loan on the $205K sale price but can not roll the closing costs into the loan, only on a refi can they do this. The gifting option here appears to be a hassle. Full 20% needs to be gifted, if not then 3% from our funds needs to be first on the sale price.
It would seem that the easiest way would be to pay it out of pocket and buy up the rate. Ideas?
Your broker is right. If you agree to accept a rate HIGHER than the par (standard) rate offered by the lender, the lender will pay you cash for that, which you can use toward the down, the closing costs or both.
In your case this seems to be the simplest and the best option to choose.
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