What is a family pledge loan?
If you have a family member that can back your purchase of real estate with collateral based on the value of their real estate holdings. This may be a way to avoid paying a full down payment. This article will explain what a family pledge loan is and the issues that one might expect to encounter when seeking such a loan.
A family pledge loan can allow you to get into a home despite not having the financial means to make a down payment. With the backing of a family member, you do not have to make a deposit on the home. Depending on the value of your relative’s property, you may be able to borrow more than the value of your new property. You can also refinance the home under a family pledge loan and use the money to pay back your relative.
It is important to understand that if you are trying to borrow a home with a difference between the loan and the family member’s collateral, you will have to qualify to finance the difference between the two properties.
A family pledge loan will permit a buyer to get into a home without the initial financial means to make a downpayment. As long as you can qualify for the loan on the difference between properties, you can get into a home with a family pledge loan.