Should I deed my house over to my aunt?
By admin on Jun 8, 2009 in Renting & Real Estate
4EvaAlwayz asked:
Okay so I bought a house, got in debt and now I can’t afford it. Competition is very high so I would not be able to sell it without fixing it up and I don’t have that kind of money to make it profitable. My aunt owns some property already and she offered to “help” by having us sign over our warranty deed to her and avoiding foreclosure. BUT the loan will stay in my name! Is this even possible?
Okay so I bought a house, got in debt and now I can’t afford it. Competition is very high so I would not be able to sell it without fixing it up and I don’t have that kind of money to make it profitable. My aunt owns some property already and she offered to “help” by having us sign over our warranty deed to her and avoiding foreclosure. BUT the loan will stay in my name! Is this even possible?
So I am to call an attorney who will then draw up the new deed transfering property from me to my aunt, and then she’ll record it. My mortgage company will not be involved at all. Please help me to understand why my aunt wouldn’t want to just buy the property from me. . .or just get the mortgage in her name? I know that if she doesn’t pay I am responsible but she will have the deed! Who deducts the interest? Are their any other tax issues? Will this affect me in the long run? I need an answer soon. Thanks guys.
Do I have something to be concerned about? Please help!
On Jun 8, 2009, kevinngunn said:
That’s not going to work… you don’t hold the deed clear and free, so you can simply give it away. A mortgage is a collateralized loan, so the mortgage company has to get PAID IN FULL if you sell.
On Jun 10, 2009, artwhiterealtor said:
Eeeks! Be careful. Transferring the property might trigger a due on sale clause. Who is this attorney, one of your choosing, or your aunt’s. I suggest that you get independent legal counsel. You might also want to discuss your situation with a reputable Realtor active in your area. It might be possible to do a “short sale” even if you don’t get enough to cover the loan.
On Jun 13, 2009, TheMom said:
Your attorney can not switch the mortgage from you to your Aunt. You are correct you would remain responsible to pay the mortgage and your aunt would hold the deed. You may have additional problems if you default with the mortgage company charging you with fraud, as you are supposed to hold the deed as well.
You could not longer deduct the interest from the mortgage unless you still live in the house. You were not clear about your residence.
If your Aunt really wants to help you she will buy the house from you. Her credit is likely better and the payments would be less.
I am not sure I would trust my own mother with the “deal” she is suggesting. You also have to consider if something ever happens to your aunt her spouse or children will own your house.
On Jun 13, 2009, dzwreck said:
There is no reason that you should not still be on the deed to the home. She will be gaining complete ownership interest in your home if she is added to the deed and you are removed, while you incur all of the payment liability. You will still be the mortgage holder and to be honest, if your bank finds out that you no longer have any ownership interest in the home, I don’t think they would be too pleased with that. You will still be able to deduct the interest since the mortgage is in your name. Yes, you should be a little concerned if you are completely removed from title to the home and the mortgage is still in your name. Is she taking over payments to the loan as well? If not, how is she helping you. How will having her name on the deed prevent foreclosure, unless she is catching up and going to begin making the mortgage payments that you are behind on?
On Jun 14, 2009, theferriscompany@sbcglobal.net said:
It’s kind that your aunt wants to help you out. But you also need to worry about your interests as well. Who is going to be making the payments? If it’s her, then just have her purchase the home from you outright. If she doesn’t make the payments, then your credit will be wrecked and then you can’t even sell the home without her approval due to her being on the deed. I am currently dealing with similiar situation with client and it’s ugly.
You may consider doing a lease option with someone that covers your payment. They can purchase at the end of 12 or 24 months. There are other details as well. But, in the meantime you are still maintaining the tax benefits, but you have someone else making the payment and a seller at the end of the term.
Just be very careful about deeding your home over to someone else when you still have the final financial responsibilty.
On Jun 14, 2009, pixysnot said:
If you sign the deed over to her, then she legally OWNS the house, and you are still stuck with the financial respinsibility of the mortgage. So that doesn’t make any sense.
So ownership of the house would be hers, while the mortgage would still be yours.
If you are going to be stuck with the mortgage you might as well keep the deed because there’s no point in signing the deed over to her.
If she buys the house from you then she gets the deed and the mortgage and then it’s not your problem anymore. That would be a big help to you.
But even if you have to sell the house for less than it’s worth and you have some debt left over from it, that’s still better than having a foreclosure on your credit. Foreclosures can be worse on your credit than a bankruptcy.
Avoid foreclosure at all costs, but I don’t see how signing the deed over to her and you getting stuck with the mortgage is helping you at all. Signing the deed over to her means you are essentially selling it to her for 1 dollar or whatever price you write down on the paper. You are better off selling your house to someone for $50,000 because that’s $50,000 less that you’ll end up owing the mortgage company.
It sounds to me like she’s trying to profit from your misfortune. How trustworthy is this aunt? Sounds fishy to me.