I’m living in a house my Mom owns. It’s worth about 500K. She wants to get some money out of it, to help with my sister’s kid’s college expenses. I can’t afford to make the payments on a 500K loan.
Can I buy a third of the house? (I could afford the payments on that much).
Will a bank lend money like that?
Thanks,
How much does your mom owe on the house?
My Mom owns the house free and clear. She inherited it from my grandmother. She doesn’t remember if the cost basis was adjusted at that time, but my grandmother originally purchased the house for 8,000.00 in the 40’s (and had many a sleepless night over such a huge debt).
You can’t purchase half of a house, but you can have to add you to the deed. Then refinance the house to the amount you can afford.
Once this is done, you would want to place this property into an asset protection entity, so no liens will attach to the place.
Thanks, CharlottePlayer.
What do you mean by “an asset protection entitiy”? And once I get the loan, won’t there be a lien on the house in the form of a mortgage?
Well i mean judgments. Anything that hasn’t been paid off in past may attach to your property.
A lot of properties, i come across have judgments on them, some the homeowners didn’t even know about.
Your mom could get a HELOC (Home equity line of credit)
Then just charge you rent to make the payments 
…or just get an education loan and have you make the payments…it’s tax deductable, too even if you don’t file 1040!
Keith
Why not just have her do a cashout refinance for the amount she wants to borrow? If she needs $50k then she does a cashout refi for $50k (+ CC’s to net $50k).
It doesn’t seem like he wants to get his mother involved in the debt part. He wants to make the payment, at the same time keeping well beneath the threshold, in case the property needs to be sold.
Create the debt yourself. You need the money, just stay focused.
Thanks to everyone for your suggestions.
To summerize, it seems there are two options:
A) have Mom get a loan (refi, HELOC or education loan) using the house as collateral. I make the payments
B) have Mom add my name to the lease, and I get a loan or create a note.
If my Mom dies without adjusting her will: in case A I’ll be “unprotected”, in case B my sister will be unprotected.
My family is close and not likely to fight over money, but why take the chance if it can be avoided?
What would be the downside of creating a trust to hold the house and having Mom and stepfather transfer 20K worth of shares each to my sister and me every year? Can I get a loan using my shares of the trust as collateral? And what if I want to borrow more against them every year? Will the house have to be appraised every year for my mom to transfer $X worth of shares?
I chose the number $20K because it represents $10K each from Mom and Stepfather. This number sticks in my head as being the maximum to avoid negative tax consequences. Has that changed? What tax implications will Mom and Stepfather, and Sis and I have to investigate?
Thanks again.
How are you ‘unprotected’ as you say if your mom dies in case A or B?
In case A the house would transfer to whomever she denotes in the will. That party will either have to pay the note on the house or refinance. Either way you’re paying the note. If it goes to another party then you stop paying the note. If anything, you are completely protected.
In case B you’re even better off. The house is worth 500k according to your post. If you and your mother are both on the deed and she dies, you would remain 50% owner even if she willed the house to another person. You’ve gotten 250k in equity for a $50k loan. That quite a return on investment.
Yes, in case B I’ll have gotten more of the house than I deserve for my contribution (paid for a third and wound up with 3/4ths assuming all mom’s assets are split 50/50) hence, my sister will get the short end of the stick. In case A, whatever I have already paid off on the note is not taken into consideration.
Sounds like you’re going to have to just have your mom do a cashout refi then.