Helping your children purchase a home? Buy with cash and refinance!

Sometimes your children need a helping hand getting the home of their dreams. Credit scores are falling, debt is climbing, and houses are still moving at a quick clip. The good news is that families are pulling closer together to weather the storm. In this post, we’re going to show you how to buy with cash and refinance. This can give your kids an opportunity to find the best rate, build credit for a better rate, or pounce on the house they want without worrying about an extended loan process.

If this is a path you want to explore, reach out to us and we’ll help you chart the course. The sooner we team up, the smoother the process will go and the better the terms we can get for you.

Let’s take a look at the process. It’s not complicated, but it does take time. Don’t forget – we’re here to help!

Figure out the cash and a contract. 

Before your children have found a home, figure out the best way to fund the purchase. You may have the cash on hand, but if you don’t, a Home Equity Line of Credit (HELOC) is an option to make up the difference. If you want to go the HELOC route but don’t have one set up, expect the process to take about four weeks. 

While you’re working out the cash or financing, create a personal contract for repayment. Setting expectations early and putting them down on paper will support the process and give everyone the assurance they need. 

Buy a house with cash.

An all cash offer can make finding a house easier. As you’ve already discussed the amount of the loan and the repayment terms with your kids, now might be the time to remind them that they can’t go past what you have to offer – the limit is the limit! Emotions run high when purchasing a new home – keep in mind that you’re all in this together as a family.

Set up a private mortgage with your kids.

Once you’ve purchased the house with cash, it’s time to set up a private mortgage with your children. You will need to do this with a title company (very important step) – the contract you created earlier can now be made legal. We are happy to provide you with title company references who are highly experienced and have executed many private mortgages. This is the key step to getting the best refinance classification and saving money on rate.

Your children refinance the house and pay you back.

Now that there’s a mortgage registered with the county, it’s time for your kids to refinance the home with JPAL!  Because the private mortgage loan agreement is set up, the mortgage loan can be refinanced as a “straight” (or “rate and term”) refinance. The new loan will pay off the private mortgage, and your children will be off and running!

If you don’t set up a private mortgage, the refinance would be classified as a “Cash out” refinance. That comes with a higher rate, costing your children more in the long run.

That’s all you need to do to buy cash and refinance! The process isn’t fast, but it is relatively straight forward. JPAL Mortgage is ready to help you every step of the way. The earlier we get involved with your process, the more insight and direction we can offer when questions arise. Contact us today and let’s get started on finding your family a new home!

JPAL Mortgage is a licensed broker in the state of Michigan. NMLS# 2189752 | Equal Housing Opportunity