If we're going to borrow money from our parents for a down payment . . .

[Anonymous]

OP, get a good mortgage broker (a pro, not the guy at the bank) to run numbers for you. You may not need as much as you think to get a good rate. I actually bought my $390K house with a 3.5% down FHA loan (interest is 4.5%) and it is very manageable for us. If you are looking at places less than $400K then you need to be thinking about setting aside money for renovations/repairs. You might try getting the full loan on your own and asking parents to lend money toward any needed renovations--that's what we did. Another thing to think about is buying a place with a second rental unit. It really helps pay for the house--my tenants pay 85% of my mortgage each month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here, one more thing to clarify. Although we will be paying back my parents, they are comfortable with "gifting" us the money, so on paper this will not be another loan, it will just be a gift. "

Classy, OP. This is fraud.

This is not fraud at all. They can completely give her that money, however, her parents would have to pay a gift tax on it and maybe OP did not realize that.

Each parent is allowed to "gift" up to $13,000 without paying gift tax in any given year - so her parents would not owe any gift tax at all on $20,000.

But then when their daughter gives them $$ back, they'll be taxed on that.

The parents won't have to pay tax when their daughter gives it back either. Please don't try to give tax advice when you clearly don't know a thing about tax law.

[Anonymous]

Anonymous wrote:OP here, one more thing to clarify. Although we will be paying back my parents, they are comfortable with "gifting" us the money, so on paper this will not be another loan, it will just be a gift. "

Classy, OP. This is fraud.

Exactly. You will have to sign something with your mortgage papers that says you were not given any loans for the down payment.

[Anonymous]

OP, I think the number you are looking for is 90 days. I think the mortgage companies only look back that far, so if the money was there before that no eyebrows would be raised. We did the same thing a few years back, bumped ourselves up to 20% and got a great mortgage rate, and no second mortgage.

[Anonymous]

Anonymous wrote:To answer your question though, you want to have it in your account before the length of time that the bank will be looking at your bank transactions. That way there won't be a jump in the amount, and then questions won't be raised. So ask your lender how far back you'll need to have records, and then get the money in there before then.
This isn't fraud for crying out loud. It's money her family is giving her.

It's not a gift. It's a loan that the parents are taking out on her behalf and which they expect her to repay.

[Anonymous]

Since no one seems to have actually answered your question. There are a few times you need to "show" the money. The first would be for your mortgage application. The bank can easily ask to see proof of you having the cash savings you claim. Another time you'll need money will be whatever earnest money you have accompany any offers you make. The other time is when you are at closing and will need all the money and such. Assuming your bank pre-qualifies you for the loan, you shouldn't "need" the money until either closing or for earnest money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here, one more thing to clarify. Although we will be paying back my parents, they are comfortable with "gifting" us the money, so on paper this will not be another loan, it will just be a gift. "

Classy, OP. This is fraud.

OP here, ok I hadn't thought of it that way. I thought it was better to be actually paying back your parents instead of just taking their money. It's not like if we had to take a break from paying or if we ended up not being able to pay them back that they'd hold us responsible for it. So we are all (my parents and us) considering it a gift upfront that my husband and I intend to pay back when we can afford it. If that's not legal then I guess we'll need to rethink it. Thanks for making me see it in a different light, though.

It is fraud for them to lie and say this is a gift when it isn't. It is fraud for you to know that this isn't a gift but say that it is. A gift is something you NEVER have to repay. Your parents will have to sign saying that this is a gift.

[Anonymous]

According to this, a gift that you are expected to repay is both fraud for both you and your parents.

A bunch of people are giving you tips on what the bank will look for. That is tantamount to giving you advice on how to commit fraud, given your stated purpose.


http://homebuying.about.com/od/financingadvice/qt/120407_mrgfraud.htm

[Anonymous]

Anonymous wrote:IMHO, the way to go with real estate is (1) to buy the smallest, cheapest house you can find in the best neighborhood you can afford; and (2) always put 20% down and do NOT borrow more than you absolutely must. I would buy a smaller house in a good neighborhood and make sure I can pay the full 20% rather than borrow from anyone. Parents included.

OP, read this post and profit thereby.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here, one more thing to clarify. Although we will be paying back my parents, they are comfortable with "gifting" us the money, so on paper this will not be another loan, it will just be a gift. "

Classy, OP. This is fraud.

Exactly. You will have to sign something with your mortgage papers that says you were not given any loans for the down payment.

Agree with you posters. The bank will ask in the papers. They should grow up and save their money and buy a house like real adults. This is why we have a foreclosure problem in the US because of losers like this buying houses they cannot afford. If you can't save a downpayment, you cannot afford a house.

[Anonymous]

Whether gift or loan, it worries me that the parents are getting the money from a home equity loan. It would be one thing if they had the cash on hand and wouldn't miss it if it wasn't repaid, but they are risking their own home so their child can be over leveraged?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here, one more thing to clarify. Although we will be paying back my parents, they are comfortable with "gifting" us the money, so on paper this will not be another loan, it will just be a gift. "

Classy, OP. This is fraud.

This is not fraud at all. They can completely give her that money, however, her parents would have to pay a gift tax on it and maybe OP did not realize that.

Each parent is allowed to "gift" up to $13,000 without paying gift tax in any given year - so her parents would not owe any gift tax at all on $20,000.

But then when their daughter gives them $$ back, they'll be taxed on that.

The parents won't have to pay tax when their daughter gives it back either. Please don't try to give tax advice when you clearly don't know a thing about tax law.

Agree on both counts.

[Anonymous]

It might be a little bit fraudy. but lots of people do it, and if you are careful, e.g. use cash where appropriate, I cannot imagine you would ever be caught.

[Anonymous]

Anonymous wrote:It might be a little bit fraudy. but lots of people do it, and if you are careful, e.g. use cash where appropriate, I cannot imagine you would ever be caught.

I don't think the law looks at fraud as a little bit. Fraud is fraud.

[Anonymous]

Oh, I missed the part about it being a home equity loan. I posted earlier. It probably won't work because like I said earlier they'll want to see where the money came from. Ah, now I see why they gave me such a hard time about documentation and getting the full statements from the past two months from the account where the money was gifted from. Umm hmmm, it's people like you that make it hard and lead to these invasive processes.

I guess you could get around it by getting the money now and just waiting awhile before applying for a loan. But it's not like you really NEED the gift so just stick with what you have. The process will be invasive enough without dragging your parents into it.