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      08-14-2011, 10:41 AM   #1
08rookie
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any mortgage guys here

my father has a low fico, roughly 580, he wants to tap into equity in his house and he isnt sure the proper way...he has close to an 80k balance on his mortgage but the house is worth, even in this market, close to 425-450k...

actually the use of the equity would be to help me with a down payment for a property....is it as simple as contacting the mortgage provider and after the approval, the mortgage balance would increase from 80k to 130k...with the same terms as the previous mortgage??

i know his fico is low, maybe we could hire a company to improve the fico before the application?

not sure if transferring property into my name would benefit the situation. i have a fico of close to 780....im under the assumption the property transfered to my name would have some tax implications...uncle same wouldnt allow a transfer of close to 350k in equity without jumping in at some point?

any help here??
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      08-14-2011, 12:57 PM   #2
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With that much equity he shouldn't have a problem getting a heloc or loan from his home but the rate will be higher then the norm.
Go to a local bank in the area.
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      08-14-2011, 04:08 PM   #3
ABQ325i
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You share this forum account with your father?

http://www.e90post.com/forums/showthread.php?t=540818

Where do you live that house prices went up 10-20% in two months??

Most home equity loans require good to great credit. You should check with a local mortgage broker though.
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      08-14-2011, 04:34 PM   #4
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I know your dad is trying to help you out and all, but taking money out of the home via a second morgage or equality line of credit is what got this country into the credit crisis we are all dealing with today. It is a bad idea to refinance your home to get access to all the money you paid to own the property. Plus it is much hard to do these days because of all the bad things people did in the past.

With that said, you do not call the bank and ask them for the money and they just adjust your mortgage payment according. The fact you think this means you should not be even trying to buy a property also since you can not afford a down payment means you probably can not afford the payments on the loan. Also, for any larges sums of money you put on a down payment the bank will want to know where it came from especially if you can not show 12 months of bank records that you had the money all along. When you tell them your dad gave it to you then they will assume it is a loan and count it against your ability to pay on the loan you are taking for the property. If you say it is a gift then uncle Sam will want his cut especially if it over $10K you will have to pay a gift tax on the money.

Do your dad a favor and let him pay off is his mortgage and have something to live in when we retires so the bank does not foreclose on him because he pulled all his equality out of the home over the years.

Also, the only way to transfer the property to you is to sell it to you which means his original mortgage would be paid off by your sales transaction, this means you would need your own new mortgage unless you plan to pay cash. You probably could have played some sort a mortgage games a few years ago, but today they are much more strict about who gets a mortgage and where the money is coming from.

Last edited by Maestro; 08-14-2011 at 04:40 PM.
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      08-16-2011, 12:52 PM   #5
ejheverest
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Why not wait a few years until you have the downpayment saved.
Another option is taking out money from your 401k, first time home buyers can do this without any penalty. Had a few friends just purchase properties within the last 2 months, FHA loan, he put down 8% and locked in on a 15 yr fixed @ 3.6 apr.
Look around, you can find mortgage companies that don't require 20% but, recommend saving up for a primary residence before you buy one.
Good luck!!
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      08-16-2011, 03:56 PM   #6
kyleb350
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Quote:
Originally Posted by Maestro View Post
If you say it is a gift then uncle Sam will want his cut especially if it over $10K you will have to pay a gift tax on the money.
Gift tax threshold is currently $13k... of if you count both parents, you can do twice that.

Quote:
Originally Posted by ejheverest View Post
Why not wait a few years until you have the downpayment saved.
Another option is taking out money from your 401k, first time home buyers can do this without any penalty.
Wow, wish I knew that earlier. You could then put the money you save on the mortgage payments back into it
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      08-16-2011, 07:15 PM   #7
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First Guaranty goes to 530 FICO scores on FHA. Try them.

http://www.fgmc.com/Default.aspx
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