When you make the decision to buy a home it’s filled with a whirlwind of emotions and decisions.  One of these decisions is who to buy the house from.  If you have the opportunity to purchase it from a family member it has it’s benefits and disadvantages.

It’s called a “Non Arms – Length” Transaction

Non-Arms length means you are purchasing the home from someone in your immediate family instead of a stranger.  This can be a great approach to purchasing your first home because you are already familiar with the property, you trust the seller(s) and you know you are likely to get a good deal.

Mortgage companies will look at a non-arms-length transaction a little differently than others, they want to ensure there isn’t something unusual happening or someone isn’t being taken advantage of, so there may be a few extra questions in underwriting.

Benefits of Buying a Family Home

From a financing perspective there are several huge advantages for buying your parents / family home.  Initially you know you’re getting the best deal, but the homes down payment can be gifted to you.  It’s called “gift of equity”.  Your parents can take the equity in the house and use it as a down payment for your purchase.  This can avoid large down payments and often get younger buyers out of mortgage insurance.

 

–> You can connect with a lender about buying your family home here. <–

The First Step

If you are considering purchasing your family home you should always get pre-approved with someone familiar with your plan. They can assist you with setting expectations and pursuing the home in the right way.  Be sure to talk to someone reputable and local because they are likely to know more about the local market.

 

 

 

What Can I Do Now?

You can Sign up for mortgage rates here

Read the About me section and learn more about how I conduct business

reviews are a great way to see who you are dealing with

if all that checks out you can apply here

Justin Scott

NMLS 8758581

Executive Mortgage