Will it work if my name is in the mortgage instead of my relative?

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I have a relative that wants to take over my mortgage but she cannot get approved for a loan because she have a low fico score. I want to help her out, that’s why I want to find out if it’s ok to transfer the title to her name and I remain on the mortgage. Will it work if we do that? What’s the best way for us?

  1. Reply
    May 2, 2011 at 5:24 am

    No, do not transfer the name, have her sign a lease to buy agreement and let her rent from you to cover the mortgage and other taxes and expenses. When the mortgage is paid off then you can transfer to this persons name.

  2. Reply
    May 2, 2011 at 5:58 am

    i would still have her apply for a mortgage. Low fico scores dont mean anything with FHA mortgages.

    Some lenders will not allow you to transfer title if there is a
    Due on Sale Clause: A contractual loan provision that states that if the property is sold the mortgage loan balance must be repaid. This disallows the seller from conveying responsibility for an existing mortgage loan to the buyer when the mortgage rate on the loan is below the current market value. Assumable Mortgages do not contain a due-on-sale clause.

    I would recommend lease-option to buy….and have her fix her fico if it’s bad..and sell it to her when it is better.

    also make sure that you have owned the residence for a while before attempting to rent it. most lenders do NOT like it when a borrower uses the home as an investment property.

    either way…i would tell her to apply for a government mortgage..to see if she qualifies….then make a decision if she doesnt.

  3. Reply
    Leo F
    May 2, 2011 at 6:42 am

    Don’t do it the lender will consider this a sale and will call the loan due. Lenders check for things like this. I commend you on helping her, but if she has bad credit, she does not pay her bills or pay her bills on time. The best prediction of future behavior is past behavior. If you did and she was late on the payment, it would go on your credit report. Your the only one that will lose.

  4. Reply
    May 2, 2011 at 6:44 am

    You cannot legally transfer title to any one w/o the lenders documented permission. Read your Note/ Mortgage papers, you will see a paper regarding accelerator clause. If you want to rent it to her, have her document the payments to you for two years, and clean up her credit. When anyone asks for help, make them put an effort to achieve the requirement. If she is current on the rent , and has made her pmts. on time over that period, (repaired her credit), and qualifies w/ income, she can apply for a loan in her name. Hope this helps, Good Luck!

  5. Reply
    May 2, 2011 at 6:50 am

    If you transfer title but your name is still on the mortgage, then if she doesn’t pay, you are still required to but don’t have any legal interest in the house any more. That sounds like a real bad idea to me. Especially since her FICO score being low means she doesn’t have a good record of paying her bills.

    And actually you probably couldn’t even do that, since the mortgage company would likely not allow you to transfer the title out of your name.

    I’d think that some kind of contract saying that she pays YOU the mortgage payment amount for however long, and that’s applied to her purchase price of xxxxx to buy the house from you, would make more sense and protect you – then you take that money, and pay the payments. That way you’ll know the payments are being made. There should be something in the contract about what happens if she doesn’t pay for some particular period of time.

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