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craehill · Joined: 27 Mar 2009 Posts: 8 3.53 Dollars($)

I would like to have a home I carry the loan on put back in my mom's name. I bought the home from her (at 175K) 7 years ago when she and my dad were having financial difficulties. She has always lived in the home (since 1965) and she is the one making the mortgage payments (she rents the home from me). Would it be best to handle this with her assuming the loan (if the lender is willing) or gifting her the equity? The home is worth 350K and the loan balance is 160K. I Just want her to take over the loan balance.

chrisburns · Posted: Thu Oct 22, 2009 3:31 pm Post subject:

Hi Craehill welcome to the forums...

What is her credit like?
Can she document income?
Does she have 2 years of work history?

You can check with the lender about assuming the loan. The gift of equity might be an option to depending on the answers to the questions above.

craehill · Joined: 27 Mar 2009 Posts: 8 3.53 Dollars($)

She has excellent credit. Though she is retired, (she is 72 years old, and in excellent health, I might add) she makes over 95K a year. And yes, she can document her income.

mrripper · Joined: 22 Oct 2009 Posts: 12 2.65 Dollars($)

what does loan "assumption" mean?

jenkin7 · Posted: Fri Oct 23, 2009 2:30 am Post subject:

Hi mrripper,

Assumption is a way of taking over the debt obligation from the original borrower. A person who wants to take over the mortgage payments can simply assume the loan and release the original borrower from the liability of the debt. However, the said person needs to meet various eligibility criteria in order to qualify for the assumption.

Hi craehill,

As she has excellent credit and has good income, which can be documented, she can definitely assume the loan. However, the loan has to be assumable and the lender has to approve it. The way things are, it seems the lender should not have any problem if your mother assumes the loan. The fact that she does not have a job may affect her chances of qualifying for the assumption. But given the income she still has got, an assumption does not look impossible. You should contact the lender and talk to them regarding this.

sgruning · Joined: 19 Apr 2010 Posts: 3 1.66 Dollars($)

Now that it is established the mother has good credit and can probably assume the loan, can you assume the loan and do a gifted equity as well to help reduce costs?

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Gift of Equity vs. Loan Assumption