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?
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.
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