Hi All;
A trusted family member is selling me his property and holding a short term note (5 yrs). There are no other underlying loans. I am paying nothing down on condition that the deed to me is not recorded.
The deed is delivered (making me the legal owner). I have a copy of both deed and DOT - they are just not recorded.
My question is: when I am ready to pay him off, do I do a refi? I mean since I am not the owner on record, how can I ‘refi’? It looks to me like the bank would want to see me as the owner of record FIRST before initiating a refi. Do I go to the bank with my unrecorded deed and DOT as proof of ownership?
Thanks for clearing this up.
Well I will take a shot at this one. Number one, the deal will be considered a purchase because your not on title. The question is, if you want to refinance, or get a purchase loan in your case, you must show that you have the minimum required down payment into the deal somewhere. So where does this come in? Maybe your balance is lower than the original purchase price because you have been making payments, but I doubt this would be enough to cover the 3.5-5% down payment required by FHA, Fannie / Freddie, so if thats the case you may need to bring some money to escrow to finish closing the deal.
If you get recorded on to title for a period of 12 months or more, then you can do this as a refinance, and just go to the max. LTV that the lender and program allows?
Is there a reason that your not getting recorded onto title? Your kind of shooting your self in the foot in a couple of ways for not doing that?
If you did this as a lease option, you could have your family member write into the contract a portion of your monthly payment goes toward your eventual purchase… This can cover any down payment requirement you might have after a period of time, however its only the portion of the monthly rent that exceeds the appraisals market rent for the subject property that you will get credit for from the underwriter as your down payment, even if your contract says more counts, the undrwriter wont give you this credit unless your monthly payment exceeds the normal market rent, and you only get credit for that portion that exceeds the monthly market rent.
Maybe you can give us more specifics as to your goal on this so we can help you structure this to meet your goals?
Hi,
Be aware that if you don't live in this property and at anytime make it a rental you will likely have to bring more or show more cash or buyer credits for a purchase / refinance!
If you have a notorized deed and DOT, but have not recorded how do you take the tax benefits of this properties ownership?
And the seller having signed and notorized a deed and DOT can not legally take the tax benefits from day of signature forward!
I’m not completely sure I understand sellers request to not record? What does seller believe are the benefits of not recording?
GR
Good points made here, but the easy solution is to buy it on agreement for deed / contract for deed / land installment, or whatever they use where you live. This document gets recorded and shows that you’re the legal owner. The deed itself is held in escrow and is not recorded until you pay off the original owner. But your title seasoning begins as soon as your installment agreement is recorded, meaning you can refi it instead of purchase (again). I’m not 100% sure but I bet your title company can do this retroactively without needing to do a full re-close.
By the way, yes you do own the property with an unrecorded deed but just fyi whoever records the deed first wins…not saying your family would do this, but if someone else records a deed on that house before you do…well let’s just say you won’t enjoy that news at all! That installment agreement clouds the title in your favor…an affadavit would as well.