Situation so far: I and my brother both are on housing market. My brother is finding it difficult to spot a house they want however I have found some desirable houses. We both have done some savings for down payment, let's say $BD is my brother's saving, $MD is mine, and currently they are parked some high yield Bank CDs so that we can withdraw them anytime immediately as we find a suitable home.
What we are thinking to do: Till my brother doesn't find a home I will use his down payment savings as well for my home purchase. And as soon as he finds a home I will take additional loan and return his down payment money.
Why we are thinking to do so: By doing so I will be able to:
1. Avoid PMI on my home loan
2. Get better rates for the entire loan
3. Save on the difference of the Bank CD and mortgage interest rate for the amount $BD. (Don't worry we will not be loosing on my benefit of tax deduction on mortgage interest, it will rather get better only. I can tell the details if necessary.)
What are our questions:
1. This plan is contingent upon the idea that I should be able to get a quick second loan or increase my existing loan and give $BD back to my brother immediately when he finds a suitable house. How much feasible is this? i.e. Will I be able to get more loan from a lender to return my brother's portion towards my downpayment? If yes, what are the pros and cons of it.
2. What other pros and cons do you see of this?
3. Any better suggestions for this?
Please do not hesitate to ask for any clarification.
Thanks,
