Should You Help A Relative Buy Property?
We always like to help our family members when we can. However, should we be helping the buy property? Deciding whether or not to help a family member buy property can be hard. Here is a list of things to consider before you help a relative buy a home for sale:
Property Agreements
You may want to help your relative purchase property but you may not agree with the property they have chosen. The reasons may vary from a bad investment, poor location, and maybe even the layout of the property. This can cause a conflict that may end up with the property staying on the homes for sale list.
You can never guarantee that you will agree with your relative about the purchasing the property. A big financial decision like buying a home for sale can cause a tear in your relationship with your relative just as big. And you can't mend a bridge from a conflict that may occur over buying property with a relative.
Transferring Funds
When you plan on helping your relative buy property, keep in mind that transferring the funds can be a little bit tricky. Your "donor funds" must be well documented, sourced, and have a well-identified paper trail. In most cases, home loan services will require that you sign a gift letter that will state your relationship to your relative. Then you will be required to identify your account where you have the money you want to give to your relative. This may require that you show at least 2 months of statements to prove where your donor funds are coming from.
Mortgage companies must keep a close eye on all the monies to ensure that there is no money laundering or fraudulent activity. This means the more the money you want to give to your relative for their mortgage, the more work you want to do to prove nothing illegal is happening. The easiest way to prevent too much movement is to use the account where your money originated from and send it directly to your relative's title company.
Keep in mind that transferring the funds to your relative will require a lot of paperwork. The lender will always ask for documentation of the fund's origin along with a gift letter. And if the funds are transferred to various accounts, this will also need to be documented. Also consider that helping your loved one choose the right home loan service to begin with can help them out financially, by ensuring that their mortgage is under fair terms.
Contact a company like FCN Bank for more information and assistance.
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