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How can we get the loan out of our name?

My husband and I signed for a loan for our son's house.  He and his wife had previously had a home where the foreclosure process was started, so they did not have they credit to sign for this current house.  The house is in our name, but my son makes all the payments to us and we pay the mortgage from our bank account.  Unfortunately, the home is in AZ as was purchased close to the top of the market.  It is currently $130 thousand under water.  My husband and I need to sell the large, family home that we live in as we are getting older and would like a home on one level.  Would we qualify for a new loan, as retirees and having our name on the mortgage of the house in AZ?  That loan is not assumable, but is there a way to make it assumable?  How do you refinance a home that is underwater?  Thanks in advance for any advice that leads in the right direction.
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November 29 2011 - Vancouver
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"No, we do not show the AZ home on our taxes as a rental.  In fact we have let our son claim the mortgage interest on his taxes."

How can this be if the house is in your name only as stated above?
He can't write off mortgage interest if his name is not on the loan.
The problem you may run into with buying another house is debt to income ratio. 
Contact your local lender.
www.supremelendingil.com
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November 30 2011
The term "Strategic Default" comes to mind.

I can point you to a AZ licensed agent who may be able to help you.

Think about your goals, and not just the cash.

Good Luck
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November 29 2011
Sorry to hear you are in this situation. I would start by contacting your mortgage company to see what your options are...they may be able to do a loan modification or an in-house refinance? However, a refinance may be difficult if the property is significantly underwater. Good luck.
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November 29 2011
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Hamp,

We have very little equity in the home we would be selling ($25 thousand?).

My son pays by check that is deposited in our account.  Then we auto pay the mortgage to the bank.

No, we do not show the AZ home on our taxes as a rental.  In fact we have let our son claim the mortgage interest on his taxes.

Thanks for answering our questions.
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November 29 2011
You could still qualify with the AZ loan and a new loan for a smaller house. There is no way to make an un-assumable loan assumable.

Do you have equity in the house you would be selling?

Does your son pay you by check?

Do you show the AZ home on your taxes as a rental?

You need to sit down with, or spend 15-20 minutes on the phone with, a Mortgage Professional. There are likely some ways to work your situation out.
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November 29 2011
Hi kdaspin!

It is definitely harder to get a refinance when you have negative equity, but it is possible.

First:

Contact an approved housing counselor near you. The U.S. Department of Housing and Urban Development Department sponsors housing agencies throughout the country to provide you with free professional housing advice.Visit HUD's website to find a housing agency near you (under resources).

Another option is to contact a full service mortgage broker (I personally just refinanced and used E F Edwards Financial, a full service mortgage broker licensed here in Arizona; it was painless!). These folks can 'Shop' a loan around to several lenders, saving you from having to get a credit pull EACH time you try a different lender, and saving you from having to VISIT several lenders!

Second:

Ask your lender or mortgage broker/advisor for mortgage refinance options. For example, the government has created the Housing Affordable Refinance Program, or HARP. This program helps borrowers and lenders that want to refinance a mortgage even though the home is in negative equity. The HARP program accepts borrowers with mortgages worth up to 125 percent of the house's value; this is just an example, but definitely something to ask about!

I hope this all helps! If I can assist anymore, or perhaps recommend someone for you (depending where in AZ you are), don't hesitate to contact me! Good luck! M~

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November 29 2011
Recommend calling a refi expert to check this out.  [promotion deleted by Zillow moderator]
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November 29 2011
 
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