Hey guys,
I have couple buying a house from me on owner financing. They said that they will be refinancing in the future in the wife’s name only since she has the better credit.
I will be drafting the deed in both their names, should I make the note in her name only or can I put both of them on the note/deed of trust if they want to refinance in her name in the future?
What’s wrong with the husband’s credit?
You could overt owner financing and have them investigate FHA financing which is tolerant to most credit issues.
Regards,
Scott Miller
I want to owner finance to them in any case, I do not want to cash this house out yet, not for couple of years. I am not sure what exactly is wrong with his credit, he just requested his wife be on the note since she will be the one obtaining the financing under. He has the income, she has the credit.
What I am trying to understand is that if I create a note under both their names, is there an issue in the future if they refinance under her name only? I do not believe so, but you guys know it better than I do
No takers?
This seems to meet the continuity of obligation guidelines recently released by Fannie Mae (if both are on the deed)—the only potential pitfalls you could face are:
Beyond that (and in the absense of knowing more about the low FICO breadwinner’s situation), it’s difficult to determine if FHA would be an appropriate exit strategy for your clients.
You haven’t provided a great deal of detail so I suggest that you consult a mortgage broker/bank with the entire story before taking action.
Regards,
Scott Miller
Fadi, if she is the only one on the note, she is the only one you can go after for your money when they don’t pay.
She doesn’t have any money.
He’s the one with money, but he doesn’t want to commit himself to be legally responsible to pay the payments.
Think about it.
Tater makes a good point. I know you are in San Antonio so I know you are following Texas law. Because he is in a community property state such as Texas he HAS to be on the deed, but not the note. If he does not go on the note then you have no recourse against him if you have to foreclose. I think the biggest thing you have to worry about is if they were to split up while you still held the financing. He could just walk away from the house by filing a warranty deed removing himself from the title.
The reality is, once there is a default, I will take the house back and won’t pursue them, but thats a valid point. He did not make any commitments, just his name on title.
In this case, she has better credit but he has the income. If I place both on the note and they go to refinance in the future, are there any specific order of listing them on the note or does it even matter?
It is better to be safe than sorry in regards to having both names on the note. This way they will both have the option in the future of refinancing. If he is not on the note he may be unable to find financing in the future. If it does not cost him anything to be on the note why does he care?
That makes sense. His main concern is that in the future not being able to refinance due to his credit and wanted to do it through hers. I will put both of them on the note.