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adding name/s to mortgage and taking mine off

The home I live in only has my name on the deed AND on the mortgage paperwork. It is my brothers home and he put $90,000 down when we bought it. Purchase price 3 years ago was 186,900. I want to move out on my own now and let them have their home to themselves. How can I get my name off the mortgage and have theirs put ON the mortgage without have 6 months worth of mortgage payments on reserve in the bank to "prove" they can afford to assume the mortgage? We are also using the quit claim deed to get my name off the deed and theirs on it.
  • March 20 2012 - Anoka
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Answers (3)

He refinances, you come off at close. It happens all the time (divorces etc) .  Have him go to a lender and apply. Then the new mortgage pays off theexisting one and the deed can then transfer from you two to just him.
  • March 20 2012
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Profile picture for wordsmth
STOP!!!!

Yes, I'm yelling.

Do not proceed further. Forget the quit claim deed nonsense. That can get you into a lot of hot water.

Why? Because transferring ownership to your brother will allow your lender to invoke the "due on sale" clause in your mortgage. Bluntly: Deeding the property to your brother would give the bank the right to foreclose. On you.

Would the bank do it? Maybe. Odds are against it, but it's a real risk unless you know how to do it properly.

Yes, you can transfer ownership that way. However, you cannot get yourself off the mortgage. It won't happen. And the lender won't permit your brother to assume the loan. Traditional assumptions (except in certain specific cases, like VA loans) haven't been permitted for a long time.

What you're proposing to do is what investors call a "Subject 2." That is, your brother would be acquiring the property subject to the existing mortgage. There are ways to do it that reduce the risk of the lender invoking the due-on-sale clause. Recognize, though, that you'll still be on the mortgage. That means that if you're interested in buying another property, this current one will show up as your obligation. No way to get rid of that short of refinancing the property in your brother's name.

Please see a good real estate lawyer before things really get messed up.

Hope that helps.
  • March 20 2012
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He will HAVE to qualify for a mortgage; I don't think there is any way around it....

However, you may be able to "gift" them the equity to use as a down payment. I found several mortgage companies that profess to do this by googling "family gift equity mortgage." After some reading, it appears that this is also acceptable with FHA mortgages. Hopefully some of the knowledgable lenders who post will drop in and advise you.  Good luck.
  • March 20 2012
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