Home Sale to our Son and Daughter-In-Law

[tmozer]

Originally Posted by charlesclark

One thought would be to put them on title with you, have them make the house payments directly to the lender (again, if it over the 12months seasoning of the loan) and in a year they could refinance.

Who could do that? A title company??

[dad2jules]

You could probably go to the Register of Deeds office in your county and do it without the involvement of a title company or attorney. Call them, tell them you want to add son and daughter-in-law to title of the house and ask if they could guide you through this.

[chet everett]

Technically for kids that would otherwise qualify for a mortgage it would be a mistake to add them to the title.

Much better to sell them the house so there is no possibility of IRS problems.

Most mid-sized banks will probably have experience in this. The rate that the kids can get might even be better than otherwise is available, as this is sometimes the kind of loan that a bank will make as a courtesy to long time good customers.

The key is that the kids have the income and credit rating rating to qualify on their own, thus lender would only need an appraisal to verify that the equity is there.

If the kids do not have the credit rating or income it probably would be better to do as others have suggested.

[nmb30]

Originally Posted by tmozer

We are interested in getting rid of our home in NJ. My married son is interested in buying it. It would be a good deal for them and be an easy transfer for us. All we would want is for the mortgage and any closing cost to be paid (we are not interested in making any money out of the deal).

The mortgage is currenly with Chase. Would the bank be willing to support the transfer of title from us to our son and daughter-in-law and, essentally, allow the mortgage to be transfered to them? We would even be willing to co-sign (or whatever) the mortgage.

Doable??

Hi tmozer,

The best option for your son will probably be what is called a gift of equity purchase. Your son can get a FHA Loan with no money down by doing it this way.

Here is an example of how it works.

Let's say you owe $210,000 but the appraised value is $300,000 (which means you have 30% equity in the home). You would sell the home to your son for the full appraised value but gift him the 30% of equity which puts his loan amount at $210,000.00. This allows your son the benefit of the existing equity for approval purposes without having to make a down payment. You can also increase the loan amount to cover the closing costs.

This can also be done on a conventional loan but your son would be required to put at least 5% of his own money down. Under this scenario your son would really benefit as he would not be required to obtain private mortgage insurance and his interest rate will be lower due to the lower loan to value which would be 70 to 75% in this case.

[Pruzhany]

Research a quit claim deed and ask your bank if there is an assumable clause in your mortgage contract.