Long story short my parents are getting a divorce. My mom is sick with a life threatening illness, and my dad just wants some cash for his half of the house. My mom wants to keep the house in the family so she is just going to give me her portion of it without payment so she can live the rest of her life out at the house without having to pay anything. (I’m gonna move in and take over all bills for her.)
The house has appraised at 185k 10 years ago, and hasnt been appraised since. The house needs no major repairs - just a few cosmetiic ones on the inside.
I believe the house would appraise at over $200k on today’s market very conservatively. It’s a 5br 2ba 2200 sq ft, on 9 acres of land with 3 nice outbuildings. (2 workshops, and a gamerom style outbuilding).
Anyways my credit isnt perfect. Lets just say my mid score is a 520 (likely its somewhere between 520 and 600) but for the sake of your advice lets just say its 520.
All my dad wants is 60k and the house will be signed into my name completely. So immediately 140k equity. I’d like to go ahead and pull out 100k which would be 50% LTV or less.
To me it seems like a no brainer that id be able to get a loan. Do you believe I could easily and if so where would you go to do it so I have the least chance of a denial.
What you could do is purchase the home from your parents. Have them give you a gift of equity for everything other than the 60K that your dad wants. That way you will have acess to the equity immediately after closing. You could also have him pull out the 100K at the same time and then just give it to you as a gift. You would need to speak to a cpa and find out what the tax implications are on a gift that size. It seems like a workable deal even at a 520 because of the LTV. The cash-out afterwards may be a bit more difficult because of the low scores.
Man, I can’t help but to feel sorry for your mom. Regardless of how the marriage has gone, to leave your spouse during a potentially terminal illness is wrong.
As to the OP, the equity gift sounds like a good idea. Ask your CPA about tax implications with it being a gift, though.
What you might be able to do is have your mother do seller financing for the major portion and this way you will only need to take out a small mortgage. If your mother would agree to be in second position on the note, i believe you can get a lender to lend you the money on that type of LTV. Since your mother is going to be holding the note on the major portion you wont have to worry because she is not out to foreclose on you, so you will only have to make the payments to the lender. Just a thought.