I would like to lower my mothers monthly mortgage payments and would like to know what you guys think about this plan. I want her to sign a quit claim deed and place my name on the deed-then i want to take the property and refinance it in my name-i’m thinking this is a good idea because my credit score is much higher than hers so i will get a better deal allowing her to rent from me at reduced monthly rate.
thanks
muse66
Do you have a current mortgage? If so then you will have to refinance this property as a NOO which means your rate is going to be higher. If that is not an issue why not have your mom just give you a gift of equity and buy it from her? This way you won’t have seasoning issues on title.
Lowering your Mom’s monthly expenses is a good deed but I would not recommend this strategy. Adding your name to the title of her home exposes her to any liabilities you might incur in the future (ie…getting sued) and will also affect your basis in the property. If I remember correctly in adding your name to her title you will be assuming her cost basis in the property which may be very low. If you were simply to inherit the property from her in the future your basis would be the then current market value. Big capital gains mistake. Why don’t you talk to a mortgage broker and just see what kind of rate her credit will get her, maybe simply adding you to the note as a co-borrower will inject your superior credit into the process and lower the loan rate.
Most lenders will require that you are on title for one year before you can refinance the mortgage into your name only.
Thank you for your input, much appreciated!
muse66
There is one option not covered that would cure your problems today without much fuss…
FHA 203(b)
The program allows for non-owner occupied borrowers to be on title with rates on par with conventional lenders.
Regards,
Scott Miller