| Advisable to payoff my parents Mortgage? |
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ray1974
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| Advisable to payoff my parents Mortgage? |
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My parents own a home and are going through some tough times (financially plus medical problems). One is unable to work because of injury.
They have about $75K left on their morgtage. My two siblings are freshmen in college and lives on campus.
I am living in an apartment several miles away and have about $60K saved towards a downpayment for a house of my own.
1) Is is advisable for me to payoff my parents morgtage? (I can borrow the other 15K from my 401K plan).
2) If yes, should I get my name on the title also?
3) Since I will be using ALL of my savings for this, what kind of agreement should there be? Do I own a part of their property then? How much say will I have? Will I share in any gains/loses if the house is sold?
Thanks in advance.
Ray
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Mon Mar 14, 2005 8:52 pm |
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David Briggs
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Have you shopped for a reverse mortgage? That is one which does not need to be repaid until their death. Depending on the current value of the home, it would pay off the existing mortgage and also provide a lump sum of cash for them to help pay their living expenses and doctor bills.
~~David
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Mon Mar 14, 2005 10:40 pm |
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ray1974
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David, As far as I understand reverse mortgages, it's for older folks who can use it to pay their living expenses and when they die, the lender would get the house.
But, my parents are not very old. Dad is 61 and mom is 60. His injury resulted from a robbery and the police couldn't locate the perpetrators so we are stuck with the bills and him not able to work. Their house isn't very expensive (about 200K - 250K). We only came to the US about 7 years ago. I am living away from them becaue of my GF (and work). However, I might have to move back in with them to help out if I can't find a solution.
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Mon Mar 14, 2005 11:06 pm |
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David Briggs
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Are they in default under their existing mortgage? If you can bring them current, then I would rather see you simply make their mortgage payments for them (rather than pay off the mortgage, unless it has some outrageously high interest rate) and conserve as much of your own nestegg as possible.
Simply paying their debt does not automatically entitle you to anything. Here are two ways to protect your investment:
Have them execute a deed which conveys title to the house to you and one of your siblings in joint tenancy. Keep this deed in a safe deposit box and submit it for recording to the public land records at some future date when you feel the time is right. Recording it might trigger the due on sale clause in their mortgage, if their lender is checking the public records.
Have them execute a second mortgage to you. When the first mortgage is paid off, your mortgage will then be in first position. Your mortgage must be paid off if the property is later sold or refinanced.
It is a good idea to consult with a local real estate attorney to make sure the documentation is done right, and to explore other alternatives such as a trust. Ask local title companies for referrals to attorneys whose work they know and respect.
Terribly sorry about their misfortune, and especially your dad's suffering grave bodily injury as the result of criminal violence. They are lucky to have such a frugal and caring son to help them.
~~David
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Tue Mar 15, 2005 5:11 am |
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ray1974
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Thank you David. Thanks for your suggestions and your kind words. I will heed your advice and go talk to an attorney asap.
Ray
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Tue Mar 15, 2005 4:34 pm |
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Rolo
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quote:
Originally posted by David Briggs
Are they in default under their existing mortgage? If you can bring them current, then I would rather see you simply make their mortgage payments for them (rather than pay off the mortgage, unless it has some outrageously high interest rate) and conserve as much of your own nestegg as possible.
Definitely.
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Wed Mar 16, 2005 11:02 pm |
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