Updated over 5 years ago on . Most recent reply
Trying to understand a loan with a "gift of equity" down payment.
I am buying an investment property from a family member for the $125k that they owe on it. The house appraises for $160k so I'm getting a $30k gift of equity to use as a down payment.
The lender is telling me that the sale price will be $125k and that is what they are going to pay off of the existing $125k loan and give me a mortgage for $95k. That is the sale price minus the $30k equity down payment but I am having trouble wrapping my head around it.
Can someone help me understand the lender paying out $125k and giving me a mortgage for $95k?