Posted on: 08th Aug, 2009 10:23 am
Hello,
My husband and I are getting ready to buy a house. My parents would like to give us a significant part of the down payment, to help us, and we all want to make sure their "share" of the property is secure (for example, if they give us $40,000 on a $200K house, they will "own" 20% of it). What is the best way to do this? Is a Quit Claim Form the correct form? What I've read about it sounds a little confusing to me, and I'm not sure. Thanks!
My husband and I are getting ready to buy a house. My parents would like to give us a significant part of the down payment, to help us, and we all want to make sure their "share" of the property is secure (for example, if they give us $40,000 on a $200K house, they will "own" 20% of it). What is the best way to do this? Is a Quit Claim Form the correct form? What I've read about it sounds a little confusing to me, and I'm not sure. Thanks!
Hi meshiloo,
You can definitely use a quitclaim deed in order to add their name to the property deed. This will help them in securing their share of the property. I would suggest you to contact an attorney while drafting the deed.
You can definitely use a quitclaim deed in order to add their name to the property deed. This will help them in securing their share of the property. I would suggest you to contact an attorney while drafting the deed.
adonis, you are jumping the gun. meshiloo doesn't even own property yet.
any lender working with you is going to want and need to know about this arrangement. it is not the norm for a "gift" to be a secured loan. in the example you mentioned, meshiloo, you would be financing, in effect, 100% of the value of the property - $160,000 mortgage (presumably) along with $40,000 second mortgage - the only way to secure their portion. that's 100% financing, and it absolutely effects your qualifications for a mortgage to make the purchase.
adding your parents to ownership of the property after you have secured your mortgage will cause the lender to call your mortgage - in other words, you'd be obligated to pay it in full. you need to be extremely careful here - you don't want to jeopardize your opportunity to obtain a mortgage.
frankly, i would have to say you're better off receiving a smaller gift that they won't feel so reluctant to require payback for. get 3.5% of the purchase price, finance 96.5% of the price with a mortgage and bite the bullet. you'll all get along better in the long run, i think.
any lender working with you is going to want and need to know about this arrangement. it is not the norm for a "gift" to be a secured loan. in the example you mentioned, meshiloo, you would be financing, in effect, 100% of the value of the property - $160,000 mortgage (presumably) along with $40,000 second mortgage - the only way to secure their portion. that's 100% financing, and it absolutely effects your qualifications for a mortgage to make the purchase.
adding your parents to ownership of the property after you have secured your mortgage will cause the lender to call your mortgage - in other words, you'd be obligated to pay it in full. you need to be extremely careful here - you don't want to jeopardize your opportunity to obtain a mortgage.
frankly, i would have to say you're better off receiving a smaller gift that they won't feel so reluctant to require payback for. get 3.5% of the purchase price, finance 96.5% of the price with a mortgage and bite the bullet. you'll all get along better in the long run, i think.
please be helpful - complex sentence structure does not help; it is a definite hindrance to people who have serious questions.