Posted on: 12th Sep, 2007 07:45 pm
My wife and I rent our house from my father-in-law. He will give it to us upon his passing. We would like to have the house now to begin some renovations. We cannot obtain financing as our credit is poor. We would like to utilize the equity in the home to renovate. Can he Quit claim the house to us? Can we purchase subject to the existing financing? Are there any drawbacks to either of these methods? Are we protected if he passes suddenly?
Hi Livingurdream,
When your father-in-law has decided to give the house to you after his death, then he can give it now also by way of a quitclaim deed.
When your father-in-law has decided to give the house to you after his death, then he can give it now also by way of a quitclaim deed.
hi livingurdream,
if your father-in-law quitclaim the house to you, then you will gain ownership to it. after getting over the title, the lender may require you to refinance the existing loan by taking a new loan in your name. refinance is necessary because of the change in title from the time the original loan was taken. in this way, your father-in-law will get removed from the loan. and even if he passes suddenly, you need not worry as you will have clean ownership to title after the quitclaim.
if your father-in-law quitclaim the house to you, then you will gain ownership to it. after getting over the title, the lender may require you to refinance the existing loan by taking a new loan in your name. refinance is necessary because of the change in title from the time the original loan was taken. in this way, your father-in-law will get removed from the loan. and even if he passes suddenly, you need not worry as you will have clean ownership to title after the quitclaim.
That is where the dilemma lies. Because we have poor credit, we cannot obtain financing. In reading many posts here, it looks as if quit claim will not help as the mortgage holder can call the loan due or demand refinancing. Our other thoughts were to purchase from him subject to the existing loan, but were worried what would happen if he were to pass. Would we be protected?
How long have you been renting from him?
Do you pay with checks? If no start immediately.
After you have proof of 6-12 months of cancelled rent payment checks then you need to contact his lender. Explain the situation he is not in the position to pay off this loan. If they want to be paid they should consider adding you to his mortgage. That way if he passes then they at least have a shot of getting the payments.
In this day and age foreclosure is almost a given. What people don't realize is lenders don't want to foreclose as they make money off of long term interest and payments. Most lenders will entertain any opportunity to make there money.
You need to make it clear that this is the only way they are going to get paid.
The second option is this. If you have made all rent payments on time and he has equity in the home, HE can gift the equity to you for a purchase and you can use this just like a down payment. This puts you in a whole lot better situation even with bad credit.
Please provide a little more info and I will try to help you.
What is your credit score?
Have you worked for at least the last 2 years and how much do you make?
Have you made other payments on time for 2 years?
Do you pay rent with checks and for how long?
How much is the house worth?
How much does he owe on the home?
You also said your credit was bad so refinance was out of the question. Have you talked to different lenders? I work as a lender and a broker but have found that many people who are continually denied can get a loan if they find someone willing to do the extra work it takes. You have to be careful though as when you find someone to do the work even if they are trustworthy they will want to get paid well for it. Just don't pay anyone any money up front unless it is to fix your bad credit. Remember though there is no magic formula for credit and if you haven't made any payments on time then no one can fix that.
Do you pay with checks? If no start immediately.
After you have proof of 6-12 months of cancelled rent payment checks then you need to contact his lender. Explain the situation he is not in the position to pay off this loan. If they want to be paid they should consider adding you to his mortgage. That way if he passes then they at least have a shot of getting the payments.
In this day and age foreclosure is almost a given. What people don't realize is lenders don't want to foreclose as they make money off of long term interest and payments. Most lenders will entertain any opportunity to make there money.
You need to make it clear that this is the only way they are going to get paid.
The second option is this. If you have made all rent payments on time and he has equity in the home, HE can gift the equity to you for a purchase and you can use this just like a down payment. This puts you in a whole lot better situation even with bad credit.
Please provide a little more info and I will try to help you.
What is your credit score?
Have you worked for at least the last 2 years and how much do you make?
Have you made other payments on time for 2 years?
Do you pay rent with checks and for how long?
How much is the house worth?
How much does he owe on the home?
You also said your credit was bad so refinance was out of the question. Have you talked to different lenders? I work as a lender and a broker but have found that many people who are continually denied can get a loan if they find someone willing to do the extra work it takes. You have to be careful though as when you find someone to do the work even if they are trustworthy they will want to get paid well for it. Just don't pay anyone any money up front unless it is to fix your bad credit. Remember though there is no magic formula for credit and if you haven't made any payments on time then no one can fix that.
Hi Livingurdream,
Even with your bad credit, you can go for refinancing. I think Livinginnky can help you and so he has asked you for more information.
Even with your bad credit, you can go for refinancing. I think Livinginnky can help you and so he has asked you for more information.