I’d like to see if you can give me some advice on buying a home with my mother, who is 74. I would use the proceeds from the sale of my home to put $240,000 down on the new home and start with a $220,000 mortgage. The mortgage will be in my name only. Once my mom’s house is sold, she’s going to give me some of her household income—$100,000, so that I can rebuild my mortgage and lower my monthly payment.
Our questions are: How should we title the house we will both be living in? Should we put both our names on the house with the joint tenants with the right of survivorship? Also, will the money she gives me to put on my restructured mortgage be considered a gift to me where I have to pay taxes on it? Is there any way to avoid this? And my final question is whether I should keep my adult daughter on the title of the house as well as joint tenants with right of survivorship, so that the house can be hers when my mother and I are no longer on this earth Are?
If you can’t answer these questions, would you be able to tell me if I need to talk to a real estate attorney, or a tax attorney, or a CPA? I don’t know to whom should I ask this type of question. I enjoy reading your column. thanks for your cooperation.
Mom. running along
‘The Big Move’ is a Businesshala column looking at the ins and outs of real estate, from navigating a new home search to applying for a mortgage.
Do you have questions about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passi at [email protected]
It is great that you are planning to buy a house with your mom, as I am sure it will provide her a sense of comfort as she grows up and needs more support. I know you didn’t ask for my thoughts on this arrangement, but I’d be sorry if I didn’t suggest several frank conversations with each other where you discuss your expectations of being together. This will be a big change for both of you, and with any roommate arrangement it’s best to be on the same page ahead of time to ensure peaceful cohabitation.
I have to admit that I’m confused about the timeline you both chose. Unless there’s a reason it makes sense to buy a home to begin with, I don’t see why the two of you wouldn’t wait a little longer to buy a home together – especially if you’re both considering the home deed. . Pooling your resources in one go will enable you to take advantage of better funding.
A mortgage restructuring can be beneficial for many homeowners. This will allow you to reduce your loan obligation without changing the interest rate or the term of the loan. At a time when mortgage rates are rising, it may be a better option for many homeowners than refinancing if your main goal is to reduce the amount of debt you owe.
There are some drawbacks to this strategy. For starters, not all mortgage lenders allow for this, so it will need to be something you clarify up front. And even if a lender allows it, they may not do so for all types of loans. Notably, government-backed loans, including FHA and VA loans, cannot be restructured. And the loan servicer will charge you a fee for the restructuring. For these reasons, some borrowers will choose to simply pay extra for their mortgage instead of going through the entire process of restructuring.
In your situation, your mother’s contribution may be considered a gift if it is not mortgaged, although you will not be liable to pay taxes on it. You should consult an accountant to get their expert advice, but it is possible that they will need to file a gift tax return. That said, unless she’s giving you and others millions of dollars in gifts, it’s likely that money will never be taxed due to the lifetime exclusion.
She may be on title without mortgage, but it is not necessarily straightforward. If you are thinking of buying a home and adding it to the deed later after taking out the mortgage, you should consult a real estate lawyer. Some lenders will include clauses stipulating that the loan must be paid in full if significant changes are made to the home title, and you may want a legal expert to review any mortgage contracts to verify this. Whether that would be the case here or not.
If you are instead planning on keeping your mother on the deed from the beginning without having to mortgage it, you will need to consult with the mortgage lender to get their approval for this arrangement. As New York-based real estate attorney Victoria Spodek Explains in a blog post“The bank must be certain that their interests are protected, as they are lending a large amount. The bank’s ability to sell assets in the event of a default is critical to their model and they will not lend money unless until they are safe.”
,‘The bank should be sure that their interests are protected, as they are lending a huge amount’.,
The problem with having multiple people on title, but only one on a mortgage, is that home ownership becomes complicated. From the lender’s point of view, your mother would have possession of the home which could make it difficult to sell if you went into foreclosure. So what lenders often do in such a scenario, Spodek says, is have both owners sign the mortgage while only one person signs the note, a promise to pay back the loan. That way, “if the loan hasn’t been paid off or goes into default, the bank will have recourse to sell the home to repay,” she writes.
Again, you can consider getting your mother listed on the mortgage. Unless he has credit problems, his additional Social Security income and assets can help you get a better rate on the mortgage. It will also reduce the issues that will arise from paying off the loan when he sells his house.
As far as how you title the house, I think it’s important to consider why you want to be on the title and what your goals are in it. It seems obvious that avoiding probate is important for both of you, but joint tenancy can have some risks. For example, if one of you runs into debt and can’t repay it, creditors can claim the property. Therefore, linking your daughter to the title can be a risky move.
For all of you, placing the home in a living trust may make the most sense. This will give you control over what happens in the home when both you and your mother pass away, while allowing both of you to stay in the house while you are still alive. Not only can your daughter get a home more easily, but she can also avoid some taxes and probate fees. You will need to hire an attorney to create the trust and structure it properly for you, but given the complexities of your living arrangement, this may be the best solution to your problem and reassurance to you and your mother. may provide that you will be able to live in this house for the rest of your days.
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