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What are the disadvantage/advantages of assuming my parents' mortgage?

My parents have a loan of $137000 left on their mortgage for a home that is now worth $504,000. They need to downsize, and my fiance and I would like to be added to their mortgage and title, and then we would like to refinance the home for $260K so that we can purchase a smaller home for my parents and use the remaining money to renovate the current home. We currently have credit scores over 760. The lender has told my mother that we can be added to the loan. Is there any concerns or risks I should think about?
  • August 16 2013 - US
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Answers (2)

Profile picture for user6007667
I did think that would come up and I was told by an attorney that there is $500,000 lifetime gift exemption. We wouldn't be taking them off of the mortgage or the title, but simply adding our names to both. We don't want them to feel like we've taken away their home, so they will still have ownership.
  • August 16 2013
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Profile picture for wetdawgs
Are your parents giving you a gift of equity?  It is quite possible what you are describing will trigger gift taxes, so make sure you see an accountant with expertise in real estate tax matters.
  • August 16 2013
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