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to_lara · Joined: 10 Sep 2007 Posts: 1 1.40 Dollars($)

My father is in a nursing home and we are renting out his house which he took a loan out against (approx 1/4 to 1/5 the houses worth) for fixups. We have a shortfall of approx. $600.00 a month that myself and my two sisters pay for. Should we transfer the title into our names using a quitclaim deed, gift a percentage of the house to the 3 of us each year (he is not well and we don't know how much longer he will live - but hope for the best) or should he sell it to us for the cost of the loan?
Help, 3 sisters lost

livinginnky · Posted: Mon Sep 10, 2007 11:14 am Post subject:

Unless his lender will let you assume his mortgage you will have to transfer the property. Either way he will actually sell you the property. The great thing about a family transaction is that he can gift all available equity to you. this means if there is 75% equity, you will get a loan for 25% loan to value. This is a loan almost anyone could get approved for as there is very little risk to the lender. The only question is how to proceed. This is not a transaction that would require realtor. If you have a good bank or mortgage broker that you deal with then they should be able to set up the entire transfer through their title company. Most good companies wouldn't really charge extra as this is just a normal transaction for them.

What do you mean by shortfall of $600?

How much is the home worth?

How much is the payment on the current mortgage?

How much does he receive in rent?

Guest

By shortfall I mean after rent, soc sec and retirement income the three sisters have a shortfall each month of $600 each, or 1800.00 a month, the HELOC, or loan against his house is included in that amount. His care is very expensive.

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Posted: Mon Sep 10, 2007 5:36 pm Post subject:

How old is your father?

If he is retired and has that much equity he may be able to get a "reverse mortgage". He would get the loan and instead of paying a payment every month the bank actually pays him. Every month that goes by uses a little equity. This may be able to take the burden off of you. However once the equity runs out you must refinance and pay the money back yet again or sell the house. I speculate that you do not want to sell so that is something to consider.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Lara,

Your father can quitclaim the property to you. But there is certain tax implication associated with this type of deed. If your father quitclaims the property, then he may have to pay the gift tax, in case the value of the transferred property exceeds the limit of $12,000. You can know more on gift tax of quitclaim deed at http://www.mortgagefit.com/gift.html

Now, if your father wishes to sell the property by means of a warranty deed, he may not be allowed to do so as there is a lien against the house. The lien will need to be paid off first and then proceed with the sale.

So, he will have to transfer the property by means of quitclaim deed only.

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Should we transfer my fathers property into our name to pay