How do i purchase parents house?

Jeffery
My husband and want to purchase my parent's house, but cannot afford fair market value. My mother wants to retire, but even if she sells the home at fmv, she most likely will not be able to afford another home in the area. We thought of her "giving" the house to us, we pay off the loan, and then refinance and build an in-law unit on the property for her, and then giving her money. We currently own a home, and would have some money from that equity. Is this possible? We are all in agreement about it, but I'm just wondering if it's a good idea, or if it can even be done. Anyone else in this situation, or has experience with this?

Andria
First of all, if you're paying off her loan with your own loan, you're buying the house. She's not "giving" it to you. However she would be gifting you the difference-- its called a gift of equity. You'll need to chek with the county and some builders and see if this MIL unit is even a viable option for the property. Is she thinking of renting in the mean time? Maybe instead of what you're proposing, you guys can buy the house for what she owes on it, (and maybe just a tiny bit more to give her some cash for moving and such) and then have her do a carry back loan for the remainder. For instance, you owe her another $100, 000. If she did an interest only loan for you guys at 5%, you'd owe her $416 a month. This is less than the APR you could get from a bank, but more than she could get if she invested it. You'd also do interest only whcih means you dont have to come up with the principal part.Then in 5 years, you refinance and pay her off, and do a 'traditional' loan. You'll have more equity at that point due to inflation/increased prices, so you could pay off any credit cards/cars to make the home affordable. just a thought!

Deena
When we sold our home to our daughter it was way below fair market value. But we knew our realtor and he set up the paperwork for us. If you know a reputable realtor its the best way to go they knowall the right paperwork to file.Our daughter just went to the bank and found out how much she could get maximum on a house loan and she paid us that amount and now she has the mortgage all in her name.You might check into one of those senior apartment complexes that way Mom has her freedom to do what she wants, sometimes its isn't the best idea to have inlaw unit.

Lashell
Called an Interfamily Transfer. It's easy to do. Just set it up with the bank that the loan is through and you can get a Grant Deed from any local Book Store or Stationary. Ask the County Recorder's for some help. Than you can take over the loan and you will be able to keep the same taxes as your mom in most cases. Whatever you do dont buy the home because you could reassess the property taxes. Not good for either party involved. Before going this far I would contact the County Builder Office and get your plans approved for the in-law unit. This way you can show the Lender that you intend to do this or you may get hit with a high interest rate because the rookie loan person will call your loan an investment property. Good luck!