Posted on: 15th Oct, 2009 09:49 am
I owe 85,000 on my house. My house is worth 201,000. What I would like to do is take out 107,500 from my house and then sign over my house to my brother. That way I would walk away with 107,500 to put towards another house. Is this possible? My brother then would take over the mortgage and the deed would be in his name.
when you say you will take $107,500 from your house, do you mean you will do a new mortgage of $107,500 and use the cash out of $22,500 after the pay off of the existing $85,000 mortgage or do you mean you plan to take out $107,500 above the $85,000 existing mortgage. that would be a new mortgage of $193,250 and that would not be possible because no mortgages exist to take cash out over 80% of the value--can not get private mortgage insurance, which would be required in such a case.
if you do a new mortgage in your name and then sign it over (quit claim deed) to your brother, you have technically triggered the due on sale clause. if the bank ever found out, they can call the loan due in full immediately. what you suggest will work as long as the bank never finds out.
can your brother get his own mortgage and buy the house from you? does he have the income and credit scores, etc to do so?
if you do a new mortgage in your name and then sign it over (quit claim deed) to your brother, you have technically triggered the due on sale clause. if the bank ever found out, they can call the loan due in full immediately. what you suggest will work as long as the bank never finds out.
can your brother get his own mortgage and buy the house from you? does he have the income and credit scores, etc to do so?
Thank you.
I purchased my second home like that - using a Land Contract. I made my payments to the original noteholder and he made them to his lienholder. Both of us were on Title, but he had "equitable" Title. My note was for 3 years and after that period I had to give the house back to him, or buy it from him. If I purchased it, the agreement was for him to provide me with $10,000.00 towards the down payment and fees.
When I was studying for my Real Estate license, a portion of the curriculum covered Land Contracts, and when I read about it I finally understood all the details about how it worked. That was years ago and I don't remember many details anymore, but it'd be worthwhile for you to research the subject because it sounds like it's a potential solution for you.
Even with a Land Contract, I think it's still like John says, and the due-on-sale clause could have been invoked because Title changed. But I always made my payments, and he always made his, so it worked out well for both of us.
When I was studying for my Real Estate license, a portion of the curriculum covered Land Contracts, and when I read about it I finally understood all the details about how it worked. That was years ago and I don't remember many details anymore, but it'd be worthwhile for you to research the subject because it sounds like it's a potential solution for you.
Even with a Land Contract, I think it's still like John says, and the due-on-sale clause could have been invoked because Title changed. But I always made my payments, and he always made his, so it worked out well for both of us.
