mortgage to buy half of a house??

Guest 0.10 Dollars($)

Here is my situation:
Recently, my mother and aunt each inherited half of my grandmother's house in CA through a trust. I now want to buy out my aunt's 50% stake and become co-owner with my mom, but also hopefully let my mom keep her lower tax rate (prop 13) on her half.

Do any lenders allow purchase loans for only 50% of the property? The few I have called don't seem to. What would be the best way to get a loan and transfer title in this situation?

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi maxpower,

Welcome to the forum.

I think you can get mortgage for the 50% of the property that you are willing to buy. Just you need to shop around a bit for lenders. There are so many lenders in this community. You can try to contact them at http://www.mortgagefit.com/unitedstates/

Feel free to ask if you have any further questions.

Thanks.
Larry

jameshogg

Hi max,

Lenders don't offer purchase loans for half of the home value. They would require you to keep the entire home as security when it's a purchase loan. Had it been a home equity loan on an already purchased property, you might have qualified for it.

In order to transfer the title, you can use the quitclaim or grant deed. Regarding the loan, I don't feel you'll get it. So, if you can make a written agreement that you'll pay the money in small instalments, I think that will be fine. And, I feel you should involve an attorney when you draft the agreement and get it signed by the aunt.

Thanks

ckalvesmaki · Posted: Sat Feb 02, 2008 8:18 am Post subject:

Here is my situation:
Recently, my mother and aunt each inherited half of my grandmother's house in CA through a trust. Is there a mortgage attached to the home? I now want to buy out my aunt's 50% stake and become co-owner with my mom, but also hopefully let my mom keep her lower tax rate (prop 13) on her half.

Do any lenders allow purchase loans for only 50% of the property? The few I have called don't seem to. What would be the best way to get a loan and transfer title in this situation? You will want to file a claim under proposition 58, reassessment exclusion for a real property transfer between a parent and a child. Your local assessor's office should have the form.
When you say buy out.....Are you going to be giving her cash? Or do you need a loan for that.....Essentially you need to do a cash out refi and be added to title.......if the goal however is to get her money and she has been in the house for a year and is over 62 then a reverse mortgage may be an option.......I think you need to speak with a broker and explain exactly what you are trying to accomplish.....because my read is that you are trying to get cash for your Mom.....

lisascherzer · Joined: 04 Jan 2008 Posts: 746 93.70 Dollars($)

While your not technically purchasing half the home as far as the mortgage lender is concerned, you can accomplish the same thing by paying your aunt her half of the equity (or whatever is mutually agreeable between you and her).

The best way to accomplish this is to find out how much you need to pay your aunt to gain the 50% interest. Then I suggest that you have yourself added to title and refinance the property with a mortgage in your name. You will then make those payments on the home. So now you have 50% interest.

So the answer to your question is yes, but the mortgage lenders just see it a little differently. If you are on title, you can take a mortgage on the property and pay your aunt. It just comes down to the technicalities of how this is achieved that differs.

Guest 0.10 Dollars($)

We already have an agreed upon price. And I would be buying the half for myself to own as an equal 50/50 owner with my mom. I would need a loan to pay my aunt. My mother and aunt already filed paperwork for prop 58 for themselves, but I believe the property is still in the trust. There is no existing mortgage. I am under the impression that a quit claim deed or just adding myself to the title would result in a gift tax (correct me if I'm wrong). What we want to do is basically transfer my aunt's half of the property to me after I pay her for it, and leave my mother's half untouched with prop 58 tax protection intact.

livinginnky · Posted: Mon Feb 04, 2008 12:13 pm Post subject:

If there is currently no mortgage on the property, it should be easy for you to get a loan to pay your aunt her half of the money.

You are probably going to have to take the title out of the trusts name and title it to you or you/your mothers names. Not many lenders loan money to trusts or to properties owned by trusts. It is not as complicated as it sounds and the title company or attorney who handles the closing should be able to do it all at the same time on the day of closing.

I am not familiar with the tax consequences and it is best to speak with a tax professional about the subject.

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