I am working on my 1st real estate deal, which I am buying subject to. Here is the situation, the mother and father name is on the loan, but the mother died and the father quick deeded his interest in the property to his daughter. The interest rate it 10%, payments $370.00, loan balance 20k(40K equity), and the loan is 2months behind.
Questions:
Can the daughter legally deed the property to me, or since the loan is still in her parents will I have to get a warranty deed from the father?
I was going to suggest the daughter contact the mortgage company to see if they will put the late payments on the back end of the loan, and also see if they will be willing to lower the interest rate. If this occurred, and then the property was deeded to me, would this possibly send a red flag up, and lead to the bank calling the loan due?
Or, if the property is deeded to me at the current interst rate, would it be better for me to refi later to get a lower rate?
1. Can the daughter legally deed the property to me, or since the loan is still in her parents will I have to get a warranty deed from the father?
The real question is whose name was on the deed to begin with. Since both parents were on the loan, it is probable that both parents were the titled owners, but this is not always the case. Both parents could have been on the note, while only one parent could have been on the deed.
Next question to answer is what was the father’s interest in the property when he gave the daughter a quit claim deed – did he actually own the property in the entirety. If so, then the daughter is now the sole owner and it is the daughter with whom you have to deal.
If the mother was the sole owner at her death, did the property go through probate? If not, then the father may not have had legal title, and his quit claim deed did not convey ownership at all.
2. I was going to suggest the daughter contact the mortgage company to see if they will put the late payments on the back end of the loan, and also see if they will be willing to lower the interest rate. If this occurred, and then the property was deeded to me, would this possibly send a red flag up, and lead to the bank calling the loan due?
If your plan is to purchase the property subject to the existing mortgage, then just make up the back payments. If the loan is only two months behind, then your best course of action is to bring the loan current and move forward. If $740 in arrearages is too much for you to handle, then you can not afford to do this deal.
3. Or, if the property is deeded to me at the current interst rate, would it be better for me to refi later to get a lower rate?
It does not make much sense to refinance this loan to get a better rate. The savings you might get with a lower interest rate will not be great enough to recover the cost of the refinance in a timely mannner.