Question:

What is a Gift of Equity and what are the advantages?

Answer:

If your father is selling you a house for $350,000 when it is worth some $450,000 this is what a Gift of Equity is. A family member selling real estate property to you for below market value is gifting you the difference to count as downpayment.

Advantages of Gift of Equity Homeownership

This is a great way for young families to become 1st time homeowners. A lender who specializes in Gift of Equity transactions will be most effective for a smooth transaction.

Also, even if you have the cash for the down payment, you could invest it or use it for any other purposes. A Gift of Equity Mortgage is a great way to finance your future home and not use up savings on deposit for the house.

The home purchase with Gift of Equity from the seller to the buyer is described in the Gift of Equity Agreement (Letter). Download Gift of Equity forms from the web.

Another great benefit of Gift of Real Estate mortgage loan is that usually the gift supplies at least 20% of the sales price and you are spared PMI payments. Such a loan can also be used for debt consolidation.

Also, since LTV of Gift of Equity real estate loans is lower than the usual, borrowers get lower rates and even not-so-perfect credit qualifies them for great rates.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: