Gifts of Equity (aka buying Mama's house)
So let's say that your parents want to sell you their house, but they don't want full market value.
Picture this: Their $500,000 house is offered to you at a remarkably reduced price of $300,000
Woohoo!!!
One option is to write up a purchase agreement for $300,000. The problem is you would need $60,000 for a 20% down payment, to avoid mortgage insurance.
The better way to structure this is to write up the purchase agreement for $500,000 instead and then have your parents GIFT you the $200,000 in equity during the loan.
What this does is gives you the down payment , pays for closing costs , and you could even buydown the interest rate if you choose (which is awesome in this interest rate environment)!
