We make buying a home from a family member safe, easy, and successful.
Why use National Family Mortgage? There are plenty of reasons!
Prevent IRS scrutiny. The current IRS annual gift tax exclusion is $15K per person. If your relative simply transfers the deed to their home over to you, the IRS may treat the fair-market value of the property as a taxable gift. In order to prove the exchange of value is not a taxable gift, but a legitimate loan, your relative must properly document their offer of “Seller Financing” and also report earning interest on the loan at a rate equal to or above the minimum rate required by the federal government, called the Applicable Federal Rate (AFR). Even if they document the loan, but report earning less than the appropriate AFR, the IRS may impute the interest as income and also view the forgone interest as a taxable gift.
National Family Mortgage ® coordinates the government registration of your loan with your closing attorney, title company, or escrow company that will generate the new deed. This will allow you to legally deduct your mortgage interest payments from your federal tax return – just like with a bank mortgage.
Proper documentation sets clear expectations and prevents future misunderstandings. Our optional loan servicing platform reduces awkward conversations, provides year-end tax statements for the IRS, and keeps everything business-like.
Traditional lenders often require private mortgage insurance (PMI), require Lender’s title insurance, appraisals, and lots of hidden fees. The Family Bank typically does not require such third party services or expenses. You can save thousands of dollars in closing costs with a National Family Mortgage ®.
A Low Interest Rate
Often, interest rates charged through intra-family loans are lower than rates charged through banks and traditional lending institutions. On average, National Family Mortgage ® interest rates are between one half to one full point lower than banks, and this can add up to thousands of dollars in interest savings over the life of the loan.
Odds are you will also provide your Lender with a better return than most CDs or savings bonds available today. You will also help the Lender spread out taxable capital gains on the property. Plus, you’re keeping money in the family!
You qualify as long as your Lender trusts you can pay back the loan. A traditional bank loan application can take weeks of work and waiting with no guarantee of approval. You set the loan terms, (but, within our Standards.) Start saving today!