Buying A House From Family

by Torrey from Pennsylvania

Regarding Buying A House From Family: Hi Kate, Will it be difficult for my niece to get a mortgage if I sell her the family homestead for a price significantly below market value?

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Kate Answers: Buying A House From Family

Hi Torrey, Non arm's length transaction, isn't that's the odd term used to describe a real estate transaction that consists of one family member selling a house to another! Like yours, a lower than market sales price is often involved.

I assume you want to use the difference between the appraised value (the higher amount) and the sales price (the lower amount) as a down payment and/or equity.

Some mortgage programs allow for this and others don't. So be certain to explain your purpose upfront for a reliable response from a lender.

If the answer is a "no" at first, try another lender. I see a lot of variance among mortgage institutions when it comes to buying a house by means of a non arm's length transaction.

I'd also recommend consulting an accountant to see if you should be looking out for tax consequences.

Good luck helping your niece. I hope you'll come back to my website again in the future. Of course, all of my information is free.

So remember to bookmark Get-Your-Best-Mortgage-Rate.com to your favorites and visit often for up to date tips for buying a house, mortgage news and refinancing advice. You can also invite friends to comment on this page or create a page of their own like you did.

Best Wishes,

P.S. Go to my Best Mortgage Rate Blog, an entertaining source of mortgage information. Subscribe now to the RSS feed.

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