Posted on: 21st Jan, 2010 06:28 am
Our daughter needs a home to live in while she's in college. She can qualify for an FHA with our help as a co-borrower. We then will pay the payments for her home: It's cheaper than paying her rent for 4 years. When she graduates from college and moves on, can she quitclaim the deed to the home to us (transfer ownership to us) if she has an FHA loan?
Signed,
Confused Empty Nesters
Signed,
Confused Empty Nesters
>>can she quitclaim the deed to the home to us (transfer ownership to us) if she has an fha loan?
no. quit claiming the deed like that will invoke the due-on-sale clause in your mortgage contract, and also won't relieve her of the mortgage obligation. the proper way to do it is to refinance it into your own names.
no. quit claiming the deed like that will invoke the due-on-sale clause in your mortgage contract, and also won't relieve her of the mortgage obligation. the proper way to do it is to refinance it into your own names.
Thank you for this information. Can you explain what the due-on-sale clause is?
Confused Empty Nester
Confused Empty Nester
All mortgages have a due-on-sale clause that says the Note is immediately due-and-payable in full if Title is modified in any manner without the Lender's permission. The Lender needs the Note and Title to agree with each other, and that's the way they enforce it.
However, they don't look for this, so they don't know Title has been changed unless the homeowner does something that results in the Lender looking closer at their loan. For example, missing mortgage payments.
However, they don't look for this, so they don't know Title has been changed unless the homeowner does something that results in the Lender looking closer at their loan. For example, missing mortgage payments.
raymond is correct in that last statement about lenders not necessarily recognizing that a property has changed hands. many people transfer title, do not notify their lender of the changes made, and continue to make payments on the mortgage, ultimately paying it in full. if you were to take that route, it is probable that you'd be able to do so without any ramifications.
of course, as raymond also pointed out, if your daughter were to quit claim the property over to you, the option to refinance the existing loan so that you'd be the borrowers certainly exists.
of course, as raymond also pointed out, if your daughter were to quit claim the property over to you, the option to refinance the existing loan so that you'd be the borrowers certainly exists.
