Should I Help Relatives Purchase Home - Yay or Nay

[2gunsup]

Question for you guys that know shyt about real estate.

Here's my dilemma, my grandparents want to purchase the house they currently live in. Their landlord is a middle eastern dude who wants to move back to his country and wants to sell the house to them for a fairly good price. The house supposedly would pay for itself with what the tenants pay for rent. Thing is my grandparents don't have the credit score needed. Now they have asked me the dreaded question of using my name/credit as the first buyer, and them co-owners as well as another one of our family members. Supposedly after a year or so everything would be transferred over to my grandparents name and I'd be removed. Now the landlord is only giving me the benefits of the deal, talking about since I have no plans on buying a house soon it shouldn't affect me. He also states it will be good for my credit score since lenders will see payments are being made. I feel dude trying to get over on me somehow though,

How will this affect me when if I ever need a loan or want to purchase a home? How about taxes?

Look me out coli. Hate to toss my grandparents dreams in the bushes but if I have to I will,

 

[Mr. Somebody]

Help them. Without them, you wouldnt exist.

 

[theworldismine13]

thats actually good idea, i would definitely do it, in fact i would insist that your name stay on as the buyer so the house stays in your name

banks will give you a second loan as long as you can prove that the first is being paid for by somebody else

you should look at it more like the foundation of your real estate business

 

[2gunsup]

Would it affect me when filing taxes? I'm not getting a dime out of this, would I have to file that I'm being payed rent and what not?

 

[Brown_Pride]

I don't think you'd have to file the rent as income as long as there's no "lease". If you have an "understanding" you could "pretend" to be living in it and i'd just be like it was your house.

Or treat it as a rental property and consider the expense a cost of boosting your future purchase power.

 

[Young_and_Reckless]

This is my forte, straight up.

You cannot purchase a rental property without 20% down. However, if this is a primary residence for you, then can purchase the property with less than 20% down. Also, since your grandparents want to be on the note, their credit scores will be used to determine the rate, so if you want a good rate, then they'll have to be left off of the financing portion of the deal and just be on title, or the deed - which gives them rights to the property.

Also, you can't use forecasted rental income if you have no history of renting properties before via tax returns. Therefore, the whole proposed housing payment would be counted against you. Total debt to income ratio on a rental property can't exceed 45% with subpar credit, and 50% with excellent credit - above 740. Also, on a rental property you're required to have at least 3 months liquid reserves (PITI), outside of the down payment and closing costs.

Feel free to ask any further questions.

IMO, I wouldn't do it. Family and business don't mix well. Nothing against your grandparents (I love mine too), but your credit is very important.

 

[VerbalIntercourse]

Where do you live? you can't rent a property you have purchase until a year after the purchase. At least that is how it is in California. People get around that law all the time.


Me personally, I don't do business with friends or relatives.

I don't care who it is. If someone fukked me over a 100K+ deal i'm suing them and putting them on the street.

If it really got ugly, then they're going to end up missing. Grand parents or not. Money first.

 

[theworldismine13]

This is my forte, straight up.

You cannot purchase a rental property without 20% down. However, if this is a primary residence for you, then can purchase the property with less than 20% down. Also, since your grandparents want to be on the note, their credit scores will be used to determine the rate, so if you want a good rate, then they'll have to be left off of the financing portion of the deal and just be on title, or the deed - which gives them rights to the property.

Also, you can't use forecasted rental income if you have no history of renting properties before via tax returns. Therefore, the whole proposed housing payment would be counted against you. Total debt to income ratio on a rental property can't exceed 45% with subpar credit, and 50% with excellent credit - above 740. Also, on a rental property you're required to have at least 3 months liquid reserves (PITI), outside of the down payment and closing costs.

Feel free to ask any further questions.

IMO, I wouldn't do it. Family and business don't mix well. Nothing against your grandparents (I love mine too), but your credit is very important.

i just threw the rental property idea out there, it would definitely involve more paperwork and it would require keeping his name on the mortgage but if he takes his name off it in a year it shouldn't be any problem and it will help his credit, because the more variety of credit you have on your record the better

 

[Young_and_Reckless]

i just threw the rental property idea out there, it would definitely involve more paperwork and it would require keeping his name on the mortgage but if he takes his name off it in a year it shouldn't be any problem and it will help his credit, because the more variety of credit you have on your record the better

He can't just take his name off of the mortgage like that though. It's not that easy. The bank isn't going to let someone else just take over the payments. He would actually have to sell the home to his grandparents in order to release his interest. This is called a non-arms length transaction.

And a variety of credit does help indeed, but length of your credit is even better, also the type of credit. If you have simple store credit, it's not as good as financing cars or homes that are financed, then paid off. These are real obligations that require length in time to payoff. FICO acknowledges these as items that raise your score and show less risk than any other type of credit. Basically, it's not helping his credit by purchasing a home for one year, then releasing his interest then next. Doesn't work like that homey.

I'm a real estate investor and own several pieces of real estate. Not trying to talk myself up, just letting you know that I've been around the block and know a couple of things or two.

 

[No1]

I don't know, I've seen to many people get fukked over doing this shyt other people then the person can't pay. From this to school loans.

 

[2gunsup]

This is my forte, straight up.

You cannot purchase a rental property without 20% down. However, if this is a primary residence for you, then can purchase the property with less than 20% down. Also, since your grandparents want to be on the note, their credit scores will be used to determine the rate, so if you want a good rate, then they'll have to be left off of the financing portion of the deal and just be on title, or the deed - which gives them rights to the property.

Also, you can't use forecasted rental income if you have no history of renting properties before via tax returns. Therefore, the whole proposed housing payment would be counted against you. Total debt to income ratio on a rental property can't exceed 45% with subpar credit, and 50% with excellent credit - above 740. Also, on a rental property you're required to have at least 3 months liquid reserves (PITI), outside of the down payment and closing costs.

Feel free to ask any further questions.

IMO, I wouldn't do it. Family and business don't mix well. Nothing against your grandparents (I love mine too), but your credit is very important.

Good looking,

So I'd have to go the primary residence route hence having to pretend I live there for "2 years?" for it to happen since they don't have the 20% DP nor am I putting a cent into the ordeal. How hard will it be for me to be removed from this once its eligible to be transferred over to my grandparents? Will it affect me when I go to purchase a home since I won't no longer be considered a first time buyer?

I'm def leaning towards not doing it but don't want to just give them a straight up NO,

Edit: I see you pretty much answered my question in your last post. +rep for saving my life and credit score,

 

[Real N Quotes]

Question for you guys that know shyt about real estate.

Here's my dilemma, my grandparents want to purchase the house they currently live in. Their landlord is a middle eastern dude who wants to move back to his country and wants to sell the house to them for a fairly good price. The house supposedly would pay for itself with what the tenants pay for rent. Thing is my grandparents don't have the credit score needed. Now they have asked me the dreaded question of using my name/credit as the first buyer, and them co-owners as well as another one of our family members. Supposedly after a year or so everything would be transferred over to my grandparents name and I'd be removed. Now the landlord is only giving me the benefits of the deal, talking about since I have no plans on buying a house soon it shouldn't affect me. He also states it will be good for my credit score since lenders will see payments are being made. I feel dude trying to get over on me somehow though,

How will this affect me when if I ever need a loan or want to purchase a home? How about taxes?

Look me out coli. Hate to toss my grandparents dreams in the bushes but if I have to I will,

Consult an attorney who specializes in tax and real estate.

 

[Young_and_Reckless]

Good looking,

So I'd have to go the primary residence route hence having to pretend I live there for "2 years?" for it to happen since they don't have the 20% DP nor am I putting a cent into the ordeal. How hard will it be for me to be removed from this once its eligible to be transferred over to my grandparents? Will it affect me when I go to purchase a home since I won't no longer be considered a first time buyer?

I'm def leaning towards not doing it but don't want to just give them a straight up NO,

Edit: I see you pretty much answered my question in your last post. +rep for saving my life and credit score,

No problem at all. No sense in screwing up your credit. I'm assuming you're a young cat, so your credit is going to be key from here on out.

You're correct on having to run this transaction as a primary, especially if you're trying to come out of pocket as little as possible. You can go FHA or conventional. The minimum down payment for FHA is 3.5%, and conventional, 5%.

Removing you from the financing portion would be a big deal because there are no "assumed" loans, when you can just transfer the financing obligation to another individual. You'd basically have to draw up a new contract and "sell" the home to get your name off the financing books. Even if it's to Nana.

Don't worry about not being a first time home buyer. There really aren't that many advantages. Yes, you can get grants but the shyt they put you through to get them is ridiculous. Plus you have to own the home for "x" amount of years before those grants are forgiven. When you're ready to buy a home, just have a little down payment and make sure your credit is right - no one can deny you as long as you qualify.

Any other questions, I'm here bruh.

 

[2gunsup]

Last I checked my credit score was 796 and I ain't trying to have no mess it up. Was going to actually purchase a home last year but decided to stick to renting,

Thanks for the advise and I'll prob PM you if I have any further questions from here on out. Def gave me some ammunition for when I hit Abuelita with that

 

[Brown_Pride]

@Young_and_Reckless
i always love how the dudes with the crazy names come in and drop professor type knowledge. Gotta love HL.