Transfer of home with mortgage....?

Question

i'm not sure how to ask this question, nor what the entire question should be so sloppy version....

suppose a married couple owns 2 houses... lives in one and rents the other out to a family member (+ spouse) who makes all the mortgage payments on that house.

how would one go about getting that house in the name of the one living there.... transfering name and mortgage, etc.

feeling like a dodo here. i know absolutely nothing about this kind of stuff. in waaay over my head.

anyone who could help out.

THANKS!

Answer 1

Mortgages are not assumable unless it's an FHA or VA loan.

Your family member will have to buy the house from you just like anyone else.  You can do this through a real estate attorney without a Realtor.

The mortgage company will not just change the name on the mortgage note b/c origination of new loans is how they make money.

I can already tell you that you will need two appraisals that the bank will order b/c it's  non-arms length transaction...b/c it involves two family members.

PS:  "Mortgage Underwriter", I can tell you now, is not a real mortgage underwriter..probably a processor...if that.  Anyone who works in the business that assumable loans went out about 30 years ago and the only ones that are left are VA and FHA.

He/She should also know that you CANNOT get title insurance on any property transferred by quit claim deed b/c the title insurance companies will not underwrite the policy...they will do a General Warranty and Special Warranty Deeds only.

You also CANNOT refinance what you DO NOT OWN.

PS:  Depending in the lender, to help with the down payment issue, you can do a "gift of equity" to a family member.  Most banks will approve that.

Answer 2

Don't feel like a dodo, that's why we're here.

Refinance is the best way to transfer the house.  If you just do a grant deed/quit claim to your relatives and they just take over the payments, if they stop for any reason, you're still responsible for the payment and balance.

If you have an assumable loan, they could assume it.  Although they still have to qualify for the loan.  Might as well do a refinance.

Answer 3

You can't transfer ownership until all liens (a mortgage is a type of lien) are released on the property.  So, your renters would need to get their own loan on the house for the amount of your present loan (or more to equal its' present value) and pay you the money to pay off your loan (thus releasing the lien).  Then the house can be retitled in their name.