Financing

**user1** · 06-06-2008, 12:59 PM

My partner and I are purchasing our first home. His parents want to help us make our down payment by giving us the 20% down which we would have to pay back as conditions of it being a loan. The mortgage companies will not let us use this "loan" as a down payment. They, the mortgage companies, say that we have to use it as a gift using a gift letter, etc. We do not want to go this route. The only thing they have been able to come up with for us is to do an FHA loan with little or no money down. Does anyone have any ideas?

**jamesww** · 06-06-2008, 07:49 PM

Originally Posted by user1

My partner and I are purchasing our first home. His parents want to help us make our down payment by giving us the 20% down which we would have to pay back as conditions of it being a loan. The mortgage companies will not let us use this "loan" as a down payment. They, the mortgage companies, say that we have to use it as a gift using a gift letter, etc. We do not want to go this route. The only thing they have been able to come up with for us is to do an FHA loan with little or no money down. Does anyone have any ideas?

Yes, one option you have is to write the contract for the seller to carry back a second mortgage for you. Along with your offer send a signed letter from your partners parents saying that they will purchase the note from the sellers. For this to work you must have your agent present the offer in person so that they can explain how it will work. Your agent should let the sellers know that sellers hold back second mortgages all the time and that these mortgages are sold on the secondary markets with no problems.

The above option is if you are set on using your partner's parents' money. Depending on what state you are in there are other types of loans like a piggy back loan where you have both a first mortgage and a second mortgage. The second mortgage is usually at a much higher interest rate than the first. Some lenders will still do these loans if the second mortgage is say 40% loan to value and the first mortgage is 60% loan to value. Let me know if you have any questions on how these loans work.

You can also use a piggy back loan to help take advantage of your partner's parents' offer. You can get the piggy back loan and then once the home closes pay off the second mortgage with the money borrowed from your partner's parents'. Let me know if you have any questions on how this should be accomplished.

Good luck and I hope you and your partner really end up enjoying your new home.

**Lor24** · 06-07-2008, 09:25 AM

Originally Posted by user1

My partner and I are purchasing our first home. His parents want to help us make our down payment by giving us the 20% down which we would have to pay back as conditions of it being a loan. The mortgage companies will not let us use this "loan" as a down payment. They, the mortgage companies, say that we have to use it as a gift using a gift letter, etc. We do not want to go this route. The only thing they have been able to come up with for us is to do an FHA loan with little or no money down. Does anyone have any ideas?

May I ask why you would not want to use an FHA loan?
The gift letter is for the purpose of attaining the loan, why not make a personal contract after you close with his parents for the actual repayment terms? of course maybe they do things diff in your state

**Codythebest** · 06-07-2008, 11:39 AM

Go owner financing. Easy, fast, and a bunch saved from mortgage fees...
You might try "subject to" also but be sure what you'r doing. Probabbly not the best idea for a first buy....

**samwillson** · 06-09-2008, 02:43 PM

Just go FHA, you probably need to address why you don't want to go this route. James gave you some good advice as well.

**GetSmart** · 06-10-2008, 03:47 AM

Originally Posted by jamesww

Yes, one option you have is to write the contract for the seller to carry back a second mortgage for you. Along with your offer send a signed letter from your partners parents saying that they will purchase the note from the sellers. For this to work you must have your agent present the offer in person so that they can explain how it will work. Your agent should let the sellers know that sellers hold back second mortgages all the time and that these mortgages are sold on the secondary markets with no problems.

The above option is if you are set on using your partner's parents' money. Depending on what state you are in there are other types of loans like a piggy back loan where you have both a first mortgage and a second mortgage. The second mortgage is usually at a much higher interest rate than the first. Some lenders will still do these loans if the second mortgage is say 40% loan to value and the first mortgage is 60% loan to value. Let me know if you have any questions on how these loans work.

You can also use a piggy back loan to help take advantage of your partner's parents' offer. You can get the piggy back loan and then once the home closes pay off the second mortgage with the money borrowed from your partner's parents'. Let me know if you have any questions on how this should be accomplished.

Good luck and I hope you and your partner really end up enjoying your new home.

This something an attorney has to do, because the agent might get into trouble for practicing law. There is a fine line of what an agents job is.

**jamesww** · 06-11-2008, 02:36 PM

Originally Posted by GetSmart

This something an attorney has to do, because the agent might get into trouble for practicing law. There is a fine line of what an agents job is.

That is not quite true since title has all of the paper work needed to implement this strategy all the agent has to do is ask for it. An agent can not write contracts or give legal advice because that would be practicing law. The agent can give advice on how one might get a real estate deal done and that is what I posted to the forum. Thank you for looking out for me though I appreciate it. I do agree with you that it anything put together should be looked over by an attorney. Although I feel the same about anything in the standard contracts as well and I have always encourage past clients to have a lawyer review their offers for them.

**RealEstate2009** · 06-13-2008, 12:41 PM

I'd recommend going FHA. However, let us know if there are some reasons this doesn't make sense in your case.

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