Posted on: 27th Feb, 2007 03:37 pm
Four years ago we tried purchasing a home and was unable to get approved by a lender due to credit issues. Because the home was such a steal, my parent puchased the home and my wife and I have been making payments on the loan since day one. Now my wife and I would like to transfer the title of the home from my parents to my wife and I. We have used one mortage lender who feels like he is pushing the quickclaim deed transaction to get the title in our name. My parents have concerns that they will still somehow be liable for the home. They want to make sure that if they do go through this quickclaim process that all intrest and liability gets transfered to my wife and I. I have also heard about a warranty deed from others at work. I am confused and want to make sure we don't screw this up. Can you offer some unbiased recommendations on what type of mortage to get?
hi zitomd,
welcome to mortgagefit discussion board.
if the lender allows the mortgage to be refinanced in your name then your parents can use a quit claim deed to transfer the house to you. in inter-family property transfer a quit claim deed is most commonly used. a warranty deed is used when the grantor warrants that the title is clear of any type of lien. but in your situation there is a mortgage so a warranty deed cannot be used.
in the quit claim deed your parents will be named as grantors and you two as grantees. after completing the deed form you will have to get it notarized and recorded with your local county recorder's office. but that said do consult an attorney to properly draft the deed.
do let me know if you have any other questions.
thanks
blue
welcome to mortgagefit discussion board.
if the lender allows the mortgage to be refinanced in your name then your parents can use a quit claim deed to transfer the house to you. in inter-family property transfer a quit claim deed is most commonly used. a warranty deed is used when the grantor warrants that the title is clear of any type of lien. but in your situation there is a mortgage so a warranty deed cannot be used.
in the quit claim deed your parents will be named as grantors and you two as grantees. after completing the deed form you will have to get it notarized and recorded with your local county recorder's office. but that said do consult an attorney to properly draft the deed.
do let me know if you have any other questions.
thanks
blue
"Can you offer some unbiased recommendations on what type of mortage to get?"
If you are not considering moving out of your home within 10 to 15 years then a fixed rate mortgage would be better than ARMs. Depending on your income you can pay extra apart from the monthly payments to shorten the total term and save on interest paid over the life of the loan.
Grier
If you are not considering moving out of your home within 10 to 15 years then a fixed rate mortgage would be better than ARMs. Depending on your income you can pay extra apart from the monthly payments to shorten the total term and save on interest paid over the life of the loan.
Grier
Blue thanks for the answer. We have found a lender to provide the mortgage to purchase the home or should I say the Re-Finance. However, we have not informed the current lender of what we plan on doing. Do we need to get approval from the current lender prior to the Quickclaim Deed transaction? My father again wanted to make sure that he and my Mother's name comes completely off of the Deed/Title and that should my wife and I default they would not have any negative feedback on their credit history.
We are requesting about $10k more from the Quickclaim lender during the "refinance / Quickclaim" so I can pay back my father for any closing costs that will need to be paid as the sales contract that we drafted has him paying all of the closing costs so that after the refinance goes through to my wife and I.
Additionally, what kind of fees should I be expected to pay? I was surprised by the amount of money required for the closing fees when the Quickclaim lender provided me the Good Faith Estimate.
We are requesting about $10k more from the Quickclaim lender during the "refinance / Quickclaim" so I can pay back my father for any closing costs that will need to be paid as the sales contract that we drafted has him paying all of the closing costs so that after the refinance goes through to my wife and I.
Additionally, what kind of fees should I be expected to pay? I was surprised by the amount of money required for the closing fees when the Quickclaim lender provided me the Good Faith Estimate.
ZitoMD,
You should inform the present lender about it. There is no harm in doing so; the loan is current at present moment. As there will be change in the title ownership from what it was when the mortgage was taken the lender should be informed about it.
The other thing is that your parents should rest assured that after the mortgage is refinanced in your name they will not have any liability towards it and will not affect their credit profile.
For a refinance, fees you are asked to pay are very similar to what was paid at the time your parents had taken the mortgage but some of those expenses won't be there at the time of refinance. Some common fees you could see listed on your GFE would be like title & escrow fees, lender fees, insurance & taxes, origination fee, fees to check your credit report, appraisal fee. Check your present mortgage about any prepayment penalty that your present lender might charge. Some mortgages do contain such a clause which is applicable for up to 5 years.
Also if you do not have any problem then I would like to see the GFE you received from this new lender.
Blue
You should inform the present lender about it. There is no harm in doing so; the loan is current at present moment. As there will be change in the title ownership from what it was when the mortgage was taken the lender should be informed about it.
The other thing is that your parents should rest assured that after the mortgage is refinanced in your name they will not have any liability towards it and will not affect their credit profile.
For a refinance, fees you are asked to pay are very similar to what was paid at the time your parents had taken the mortgage but some of those expenses won't be there at the time of refinance. Some common fees you could see listed on your GFE would be like title & escrow fees, lender fees, insurance & taxes, origination fee, fees to check your credit report, appraisal fee. Check your present mortgage about any prepayment penalty that your present lender might charge. Some mortgages do contain such a clause which is applicable for up to 5 years.
Also if you do not have any problem then I would like to see the GFE you received from this new lender.
Blue
Yes Zito,
The lender may be asking you to quitclaim deed because in your situation it will work the best. The warranty deed is used in most selling and buying transactions where the properties have clear title, that is, they are free from any lien. But in your case, there is a mortgage which I think you are about to refinance. So, that's a lien on property due to which the quitclaim deed should be used for the transfer.
Your parents would have been liable for the mortgage had they just transferred the property without refinancing the loan. I guess they want to transfer the liability also; so you will have to refinance the loan in your name and take over the responsibility of paying it off.
Thanks.
The lender may be asking you to quitclaim deed because in your situation it will work the best. The warranty deed is used in most selling and buying transactions where the properties have clear title, that is, they are free from any lien. But in your case, there is a mortgage which I think you are about to refinance. So, that's a lien on property due to which the quitclaim deed should be used for the transfer.
Your parents would have been liable for the mortgage had they just transferred the property without refinancing the loan. I guess they want to transfer the liability also; so you will have to refinance the loan in your name and take over the responsibility of paying it off.
Thanks.
depending on purchase agreement you may be able to do as a refi Interfamily transfer real easy.
joeymortgage@msn.com for more info.
joeymortgage@msn.com for more info.
I guess I'm just old fashioned. It's my preference in these situations to do a straight property purchase and use a gift of equity from the parents to cover the difference. Let me give you a scenario from a loan I closed yesterday.
$140,000 appraised value
$140,000 sales price
Mom & Dad wanted to walk away with $119,000.
$122,000 mortgage loan to the kids and in the contract the seller agreed to pay $3,000 in mortgage closing costs on the kids' behalf. The parents wrote a simple "gift of equity" letter for the remaining $18,000 difference between the $122,000 loan and the $140,000 sales price.
One advantage to doing it this way is the structure of the loan the kids are left with. If you do a refinance, make sure you are asking the lender how they are going to VALUE the property. Some lenders won't allow you to use an appraised value because you just bought the house (via quit claim) at a sales price of $0.
By doing a sale/gift of equity you have to qualify for the purchase loan, just like you would have to do for a refinance after a quiit claim, but you at least are making a clean transaction. Closing costs should be the same also.
Just another take on this subject.
$140,000 appraised value
$140,000 sales price
Mom & Dad wanted to walk away with $119,000.
$122,000 mortgage loan to the kids and in the contract the seller agreed to pay $3,000 in mortgage closing costs on the kids' behalf. The parents wrote a simple "gift of equity" letter for the remaining $18,000 difference between the $122,000 loan and the $140,000 sales price.
One advantage to doing it this way is the structure of the loan the kids are left with. If you do a refinance, make sure you are asking the lender how they are going to VALUE the property. Some lenders won't allow you to use an appraised value because you just bought the house (via quit claim) at a sales price of $0.
By doing a sale/gift of equity you have to qualify for the purchase loan, just like you would have to do for a refinance after a quiit claim, but you at least are making a clean transaction. Closing costs should be the same also.
Just another take on this subject.
My wife and I have been living in a home purchased by my parents for 11 years. My parents are getting up in age and want to transfer the mortgage to my name. They purchased the home and we've been making the payments for all these years but my credit is not perfect. We've never made a late payment but have nothing to show for it so it makes sense to go ahead and refinance.
My question is...how much of an obstacle is my credit report in all of this? I figure, since there is $70k left on the loan and the house is worth $240k approx; wouldn't a lender see the house as collateral in all of this when considering the risk? Thanks for any advice.
My question is...how much of an obstacle is my credit report in all of this? I figure, since there is $70k left on the loan and the house is worth $240k approx; wouldn't a lender see the house as collateral in all of this when considering the risk? Thanks for any advice.
Hi Guest,
Irrespective of the amount of equity you have in the property, the lender will check your credit and give due importance to it. Unless you meet the credit requirement, the lender will not let you refinance the loan.
Thanks
Irrespective of the amount of equity you have in the property, the lender will check your credit and give due importance to it. Unless you meet the credit requirement, the lender will not let you refinance the loan.
Thanks