Interfamily transfers permit some unique rules to be considered when buying a home. We encourage mortgage planning to implement these strategies. A gift of equity can be used a few ways…and when done right, can drastically limit the use of actual money needed to buy a home. An interfamily transfer – also known as a non-armslength transaction – can be used three ways in any combination:
First, for down payment; Second, to cover closing costs for the loan; Third, to actually pay off debt. In many cases, these are great when estate planning is used in combination when transferring real estate. Imagine buying Grandma’s house, paying off your consumer debt, renovating the home, and doing so with almost no money out of pocket. It is certainly a technical transaction…and yet it’s done quite often. Do you qualify for a gift of equity? Maybe so…ask us how
*Not intended as real estate, accounting or investment advice. Contact your financial representative for more information.