Buying A Home – Should Your Family Help You With Your First Home?

If you’re like some first time home buyers, you may have considered the option of using private money to help you buy your first home. With the proper situation, it can be a win win situation for both parties. Your family and close friends can assist you in funding your first mortgage, down payment, or a second loan. Consider these arguments for using private funds from family and friends:

1) Paying Less Interest While Still Receiving Tax Deductions – You can negotiate a more favorable interest loan with family members then with a regular lender. Savings can amount to thousands of dollars over the period of the loan if you pay 1 to 2% less in interest points. If you handle the paperwork correctly, you can receive the same interest tax deductions as a traditional loan. Consult with your tax advisor for details.

2) Flexible Payment Schedule – When you use a private mortgage lender, you’ll get more flexibility with the payment schedule them with a bank. You have the option of making quarterly payments or even negotiating a grace period of zero payments for a few years. Also if circumstances occur where you’ll need to stop working temporarily, you can arrange for a temporary pause in payments until your circumstances improve. You won’t find a lender that flexible.

3) Zero Points Or Loan Fees – While most banks charge thousands of dollars in application fees and other points, family and friends won’t gouge you with these fees.

4) Not Credit Score Dependent – Unlike a bank that will require you to have a perfect credit score, a family member will be less worried about your score if they trust you to be responsible in repaying the loan.

5) No Private Mortgage Insurance (PMI) – When you borrow more than 80% of the purchase price from a bank, you’ll be required to pay PMI. Your family won’t require you to spend this fee.

6) Minimal Documentation – Regular banks force you to fill out a lengthy application form and submit detailed documentation substantiating all your income, assets, and expenses before they’ll even consider your loan application. Fortunately with your family and friends, you won’t be subjected to such tedious scrutiny.

7) Pick Up A Hot Deal – When you borrow from family and friends, you have the flexibility to fund and close a transaction quickly-thus allowing you to pick up a great deal from a time pressured seller.
The Condition Of Your Home Won’t Be Important – If you’re working with a traditional lender, there’s a high probability you’ll be forced to complete all major defects before the transaction is closed. A private funding source won’t be as strict so you can take advantage of fixer uppers with great profit potential.

Want to find out more about Fullerton homes for sale, then check out these local Fullerton Realtors to find one.