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My Husband & I plan to use a quit claim deed to add our daughter as 1/3 owner of property. The main reason we plan to do this is for ease of sale in a few months. Our state has less requirements when selling to family, sewer inspections for one. We are told that already having her as a 1/3 owner would make this process even easier.

Our daughter and her family have been living in the house for 2 years paying us rent while she finished her nursing degree. The plan was to hold off on the actual sale until she was out of school and settled in a new job. Then we got caught up in the housing crunch. Due to the drop in house values last year the agreed upon sale price for the property is now less than the value of the property.

In the mean time we purchased a second property outright where we now live.

It order for us all to move forward, we have lowered the agreed upon sale price but will likely still need to pay down that mortgage some for our daughter to still have 20% down to avoid the extra cost of PMI.

Our main question is if we do add her as a 1/3 owner of the property will our mortgage company be able to call in the mortgage (require payment in full) since we have another person added to the property? We are current with our mortgage with no late payments.

Any information you can give us would be greatly appreciated.

sonjakracine · Joined: 24 Oct 2007 Posts: 77 15.05 Dollars($)

Honestly, your mortgage company won't even know you did it so it should not affect your current loan. You may want to consider leaving her owner on record for 1 yr, in doing so she can actually refinance the property instead of "purchasing". If you decide to let her buy it then I would not complicate things now by putting her in the title. The reason being why would she buy a property she technically already owns ( the minute she is on deed, she's an owner). Family sales are complicated enough you may just be shooting yourself in the foot. As far as PMI the best way to avoid that is to gift her the equity for the down payment. For example let's say you owe $80K. Sell it to her for $100K and gift the $20K for the down payment (conventional loan only) . I may also caution about you paying down the mortgage to keep her out of PMI. I know as family you would like to help but don't deplete your savings to do so, she's a big girl let her see how these things work, this is life you are helping enough by the gift of equity that can help her with down payment and closing costs.

This is so much easier discussed in person as there are a lot of details. You are welcome to contact me if you have further questions!!!

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Quit Claim Deed - effects on current mortgage