This Holiday Season, consider giving the gift of equity. If you are privately selling your home to one of your children or significant other, you can sell it to them at a price that is significantly less than the market value.
An example of how it can work:
If you sell your home, that is valued at $400,000, to your child and give him or her 20% equity, that would mean that $80,000 could go towards their down payment. Thanks to your gift of equity, the mortgage would only be $320,000. A portion of that money could go towards closing costs as well.
A Family-Sized Gift of Any Size
The caveat or “loophole” is that the gift of equity can only be given to family members. This may include your spouse, fiance, domestic partner, blood relative or child. However, there is no limit to the amount that you can give. Consult your financial advisor before making this decision.
This gift needs a receipt
The person receiving the gift must sign a “gift of equity” letter. This letter must include the donor’s name, relationship to borrower, address, equity gift amount and a statement that no payment is required.
When you gift your equity, it is a great way to keep your home in the family. If this is something that has been on your mind for the holiday season, one of our loan specialists at America’s Moneyline can help you wrap it up.
Give us a call today!