I am considering buying my first home.
The deal involves three parties, and no realtors. (I buy house #1, they buy house #2, and the third builds new. Parties are local, so it is more of a convienience since no houses will be put on the market. Nothing happens until I agree to buy.)
I can borrow 80% at fixed rate, and my particular state will loan me the downpayment at 2%, so I can opt out of mortgage insurance. They say this is a good deal.
However, I floated the idea to the owner of the house I planned on buying to sell me the house 10% less than the deal he offered me (on paper, or to the bank, or IRS) and I would give him 3 or 4 payments in cash, in an envelope, like in the movies.
That way, I could still borrow 100% of the house, but get it at a better price, and lower monthly payment.)
I told him it might show up on an audit, if he had to explain things to the IRS.
It a good idea to try and pay-down the price on the back-end? If I used up all my resources, I could come up with the 20%, but I’d be FLAT broke, and that’s not pretty. Is this illegal? If not what is it called, so I can do some research.