I currently live in a house owned by my grandparents, under a verbal agreement where I only pay utilities. They’ve offered to sell me the house for $150k, though it’s valued between $200k and $230k according to Zillow. I have $46,000 saved but was previously rejected for a mortgage when I applied with a 20% down payment due to my income of $35,000 a year. I need about $60-64,000 to afford the house on my salary. I’m working towards my Master’s degree and have a bachelor’s with no student debt, though I have some loans for my current studies. My credit score is around 740, and I have no other debts. My boyfriend and I are considering moving to his city next fall for better job prospects and to gain some distance from my controlling family. Given these circumstances, is it wise to buy the house only to potentially sell it shortly after? The financial gain from the equity could be significant for starting our life together, but I’m unsure if the short ownership period makes sense.
Consider using a gift of equity for the down payment, which could help bridge the financial gap.
LilyLoans said:
Consider using a gift of equity for the down payment, which could help bridge the financial gap.
Definitely explore the gift of equity option. It could cover your down payment and closing costs, significantly reducing upfront expenses.
LilyLoans said:
Consider using a gift of equity for the down payment, which could help bridge the financial gap.
I’m concerned about potential taxes on the gift of equity if it’s not reinvested in property immediately. We need to figure out the exact tax implications.
@Jem
Consulting an accountant could clarify the tax situation regarding the gift of equity. There are one-time tax exemptions for such gifts, but specifics vary.
LilyLoans said:
@Jem
Consulting an accountant could clarify the tax situation regarding the gift of equity. There are one-time tax exemptions for such gifts, but specifics vary.
I’ll talk to an accountant through a family contact and get more details. Thanks for the suggestion!
If you’re short on the required amount, maybe your grandparents could consider a soft second mortgage to help?
Brooke said:
If you’re short on the required amount, maybe your grandparents could consider a soft second mortgage to help?
I’ve previously asked about a second mortgage, but they’re only willing to sell at the agreed price without additional financing options.
@Jem
That’s tough, but you might still have options like a HELOC or even borrowing against another asset, like a car, to make up the difference.
The immediate equity you’d gain could be substantial. Even if the monthly payments stretch your budget, the financial upside could be worth it. Have you looked into whether you could afford the estimated $1,000/month mortgage payment?
@Jamie
I’m trying to figure out if I can handle the monthly payments, especially considering my desire to move and the complicated dynamics with my family.
Jem said:
@Jamie
I’m trying to figure out if I can handle the monthly payments, especially considering my desire to move and the complicated dynamics with my family.
What’s the rental value of the house? Could it be a viable rental property if you decide to move? That might change the financial calculus significantly.
It seems like a clear financial win to buy the house at such a discount. Consider all your options carefully.
Zeke said:
It seems like a clear financial win to buy the house at such a discount. Consider all your options carefully.
It’s definitely tempting financially, but balancing family dynamics and understanding the mortgage process as a first-time buyer are my current challenges.