Real Estate Community Forum

I have a friend who decided to by pass the banks and went to her parents to pay for an entire house. She is suppose to pay them $500 dollars a month. I'm not sure how that's working out, but she seems happy.

My parents also want to give me money towards a house. They are offering to pay for a down payment on a home, with the agreement that I make monthly payments to them. Since this is my family, I want to up a contract so there will be no problems in the future. Does anyone here have any suggestions on what I should include in the contract? Are there any places that I can go on-line to get ideas on what to include?

That's great news that your parents want to help. There are different ways to accomplish what you are asking.

If you are purchasing a home you need to be mindful that any lender is going to want to know all loan terms, including your parents for purposes of calculating your ability to afford the monthly mortgage and related payments for your new home.

You can do a simple promissory note with your parents and outline the terms you agree to.

You could also have an actual note and mortgage prepared and if your parents want to they could file it on the property just like a bank would do.

Alternatively, you parents could give you a gift down payment with a letter stating that they are not requesting you pay them back. If this is the case, you would not have to include the gift amount when calculating your monthly debt.

As far as forms are concerned, you can do a simple search and get hundreds of hits or you could go to your local office supply store and purchase some forms.

I am partial and suggest contacting a real estate attorney.

Good Luck

If you are interested in getting a contract for making payments to your parents, there are several software packages available at Comp USA or Office Depo that have different types of contracts. I recently went there to purchase contract forms that I use for my business. Its a great place to get professional documents at a cheap price. In fact, if you want to make your contract more legal, have your parents sign the contract and have it notarized by the bank. This will make it more official.

You are lucky your parents are able to help you with this, i think it's a great way to escape the bank's high interest rates. It's easy to find all types of legal documents on internet these days, a contract should be no problem to get. After it gets signed by yourself and your parents make sure to notarize it, its the only way to make it legal.

I too am always partial to contacting a Real Estate Attorney for something like this simply because when you go to sell the home, you will want to get the "payoff" amount to the title company and make sure that any equity comes back to you as the owner. I think it is great that your parents are lending you the money to purchase. Congrats on becoming a homeowner!

Creating the Contract
1.
Step 1

Fill out and sign your federal income tax form.
2.
Step 2

Print a copy of Form 9465, Installment Agreement Request (see irs.gov). The form is also available at IRS offices and in Package X.
3.
Step 3

Fill in your name or names, Social Security number or numbers, and address.
4.
Step 4

Omit the lines that ask for your phone numbers, bank and employer if you find this invasive. This information is not required.
5.
Step 5

Enter the form number that you used - 1040, 1040A or 1040EZ; the tax year ' 1999 if it's the current tax return; and the amount of tax you owe.
6.
Step 6

Decide how much money you can send in now. Make this proportionate to your bill. You need to show that you are making a good-faith effort to pay.
7.
Step 7

Determine how much you can pay each month. Make it a realistic amount, but try to pay in full within 12 months.
8.
Step 8

Enter the day of the month the IRS will receive your monthly payments. Base this on your payday and the speed of the mail.
9.
Step 9

Fill in your bank information only if you want the payment automatically deducted from your bank account each month.
10.
Step 10

Sign the form; both spouses must sign if you're married filing jointly.
11.
Step 11

Attach the form to the front of your income tax return.
12.
Step 12

Mail the forms to the IRS with your initial payment.
Fulfilling the Contract
13.
Step 1

Expect the IRS to assess a $43 fee for setting up the installment plan.
14.
Step 2

Expect to be charged interest on the balance due.
15.
Step 3

Send in subsequent payments monthly even if you don't receive acknowledgement of the contract or a monthly statement. The IRS does not bill you each month.
16.
Step 4

Expect the contract to be terminated if you miss payments or send them late.

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