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I am buying my mothers home in AZ. Do I need to go through title/escrow? Or just the bank?

My mother can no longer afford her mortgage on her retirement.  I've agreed to buy her home, based on market value, so she can remain there.  I live in CA and she is in AZ. She is not upside down on her loan, and I suppose this would be a FSBO sale.  Looking to save a little money by not involving real estate agents and so forth.  Do I need to go through escrow/title, etc...?  OR can I just contact the bank and; 1) have an inspection and appraisal done, then 2) get a mortgage loan from them and be done?  Thank you for your advice.
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April 01 2012 - Tucson
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Answers (7)

Depending what the purpose of the sale is, you may also want to consider a reverse mortgage and your Mom will be able to stay on the home until she is no longer with us.  The closing costs to obtain the reverse mortgage are added to the mortgage.  Otherwise, since this will not be your primary residence you will need to come up with 20% down.  Consider both options before you rush into purchasing the home.  Good luck!
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April 01 2012
If you are going to finance the purchase of your mother's home, you can let your lender take care of the transaction, if that is what you want. They will arrange the ordering of the appraisal & the title transfer. If you order an appraisal yourself, the lender will most likely not be able to use it, due to lending regulations in place.

If you purchase the property, it will not be your primary residence, nor will it be your second vacation home, so most lenders will consider this a "Non-Owner Occupied" (NOO) investment property, where you will need a minimum of 20% down for the purchase - gifting of equity is not allowed on a NOO, your interest rate will be higher, plus their may be additional Points to pay.

There is a loan program that may allow you to buy this home as a Primary Residence for your mother, with the lower rates & fees, if the guidelines are met.

If you want to avoid the purchase process, your mother could "Quit Claim" you onto title & you could help her with the payments, or refinance the property into your name, removing your mother, at a later time. 

There is also another option that may be available for your mother, as well. Please feel free to contact me if you have any further questions, I'd be glad to help. 

All the best, 
Ros 

Roswell Moore, CMPS 
Certified Mortgage Planner 

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April 01 2012
I would recommend you start by contacting the bank that holds your mom's mortgage first. You never know what options they may have for you until you ask.

Since you're purchasing the house with a mortgage loan, you will be considered an investor if you own another home so, you may want to be sure you're ok with the terms of the new loan as well. Typically, you will have to put approximately 20% or so down. A good lender will help you understand your options based on your specific scenario. Again, You never know what options they may have for you until you ask.

You will need to open escrow with a title company. To do that, just pick one in AZ. Make sure they have the contact information from the bank so, they can facilitate the loan documents getting to all parties for signatures. Also, give your bank the contact info for the title company. Both will walk you through the process from there.

I congratulate you on your questions. You seem to have some knowledge on the process. Getting answers here is a good way to get some ideas but, the best method is to go direct to the source first.

After speaking with your mom's bank, you may have more questions to bring back to this conversation but I hope they're able to work with you to get it done seamlessly. Good Luck
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April 01 2012
My wife is a Real Estate Attorney, that will cost you.  You can contact any Title Company, I can recommend a couple of good ones & Title Officers.  That is all you should need to do, congrats & enjoy your home.


Spirit
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April 01 2012
The Bank needs to approve you for a loan in the amount you wish to pay and normally they will do an appraisal.  Use an AZ title company to insure the paperwork is done properly. You can surely pay for an appraisal, but a market analysis using several sold properties near your Mom's home and like hers would most likely establish a sales price.  It is very important to make sure the paperwork puts you in title and releases Mom from the loan obligation. Your bank should be able to assist you with all the legalities to make sure you and your Mom are protected.
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April 01 2012
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thank you for taking the time to respond.  Sounds reasonable, and will do. 
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April 01 2012
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If you are purchasing the house, you will need to get on the title.  Your best option for doing it properly  would be a real estate attorney. As this is a simple sale, call a couple for a estimate of what it would cost.
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April 01 2012
 
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