Anyone...help? Estate, mortgages, house questions...

[MomRN]

First, my dad is seeing a lawyer about this next week. So, we will be talking about to a professional, but would still like a suggestion about what to expect, what can be done, etc.

My grandmother passed away last week. It was not unexpected, and while I am sad, must of my grief was during her period when we put her on comfort measures. I don't want anyone to think I am not mourning her, as I am, but I'm trying to figure my own families survival.

Basically, for the last 5 yrs we (me, my dh, and ds) have been living with her. We helped with taking care of yardwork, dinners, etc. She paid the majority of the bills, her contribution to helping me through nursing school.

My dad is the only heir to her estate. He wants me to have the house. The house was bought for $110,000. She paid a substantial downpayment, and the current balance owed is around $70,000.

I would like to take over the mortgage on the house. However, my credit isn't great (just over 700). My credit report shows some items in collection and some balances owed.

There were annuities left also, but what will be left of those after taxes we don't know.

So, the basic question is this... can I qualify for a mortgage on a $110,000 house for $70,000? I don't have a down payment, but I would be borrowing less than the value of the house. From what I've read, this should be possible. BUT...

What should be considered here? I see a few possibilities... my dad buys the house with the inheritence, and I buy the house from him. We work out something with the bank where the mortgage can be transferred to me. What is a fair interest rate for my credit score? Who else can I mortgage shop with to get the best rates besides the bank my grandmother has the mortgage with? Who do I talk to about this stuff... the lawyer, the bank...???

Basically, I need some education, and while I've googled my head off, I'm not sure what information to follow. This would be a first time home purchase for me, and my stomach is in knots not knowing what the next few months may bring.

Also, do I pay the mortgage under my grandmothers name and house insurance under her name? The bank that her mortgage is under is aware of her death, so would they accept the payment?

Thank you for your advice, professional suggestions, or websites for review. Any words of caution or advice would be appreciated. As I stated, my dad will be seeing a lawyer next week, but I just want to be prepared.

 

[fab5friend99]

A morgage can not be transferred to another person so that option is out. If the estate is more than the morgage then the mortgage must be paid from the estate. Otherwise, the estate could declare bankruptcy and you would have to leave the house. IF both you and your father were willing, you could you could have a private mortgage where you would pay him each month and leave the banks out of it. He would have to declare the interest income on his taxes each year and you could take the mortgage interest deduction. The downside of this type of arrangement is that it would not go on your credit report and help improve your credit score.

 

[SuzanneSLO]

[snip]My dad is the only heir to her estate. He wants me to have the house. The house was bought for $110,000. She paid a substantial downpayment, and the current balance owed is around $70,000.

I would like to take over the mortgage on the house. However, my credit isn't great (just over 700). My credit report shows some items in collection and some balances owed. . . .[snip]

The first thing you need to do is be honest with yourself about whether you can afford to make payments on a $70,000 mortgage, plus taxes and insurance. If you can, then even in today's market, you will porbably be able to get a mortgage. If it is going to be a stretch, then it may not make sense to borrow the money even if a bank is willing to lend it to you. In that case, maybe your Dad could refinance the mortgage and rent the house to you until you are in a place you can afford to buy.

The second thing about which I am unclear (but you may not be) is what you mean when that your Dad whats you to "have" the house. Do you mean he wants you to buy it from him or that the equity will be a gift? You need to make sure both you and your Dad mean the same thing to avoid issues.

If your Dad wants you to buy it, you may again have a problem getting a mortgage because in effect you have no down payment. You Dad can finance the difference, but again this may stretch your finances and is usually frowned on by lenders.

If you Dad wants to give it to you, he can give you $13,000 in value each year without having to file a gift tax return. Double this if he gives an interest to your DH as well.

It looks like there is $40,000 equity based on a purchase price of $110,000 minus a $70,000 mortgage but the fair market value may actually be above or below the purchase price, depenign on when it was purchased. agin, if you go forward, youand your Dad need ot be on the same page on the value of the house.

Finally, as noted by the PP, the mortgage probably contains a due on sale clause that means the lender can decide that the entire mortgage balance is due as a result of the owner's death. However, most lenders don't want to foreclose and will work with the heirs for a while as long as payments are being kept current and the taxes and insurance paid. Eventually, however, the mortgage will have to be refinanced by the new owner, hopefully you!

Best of luck -- Suzanne

 

[allison443]

First, my dad is seeing a lawyer about this next week. So, we will be talking about to a professional, but would still like a suggestion about what to expect, what can be done, etc.

My grandmother passed away last week. It was not unexpected, and while I am sad, must of my grief was during her period when we put her on comfort measures. I don't want anyone to think I am not mourning her, as I am, but I'm trying to figure my own families survival.

Basically, for the last 5 yrs we (me, my dh, and ds) have been living with her. We helped with taking care of yardwork, dinners, etc. She paid the majority of the bills, her contribution to helping me through nursing school.

My dad is the only heir to her estate. He wants me to have the house. The house was bought for $110,000. She paid a substantial downpayment, and the current balance owed is around $70,000.

I would like to take over the mortgage on the house. However, my credit isn't great (just over 700). My credit report shows some items in collection and some balances owed.

There were annuities left also, but what will be left of those after taxes we don't know.

So, the basic question is this... can I qualify for a mortgage on a $110,000 house for $70,000? I don't have a down payment, but I would be borrowing less than the value of the house. From what I've read, this should be possible. BUT...

What should be considered here? I see a few possibilities... my dad buys the house with the inheritence, and I buy the house from him. We work out something with the bank where the mortgage can be transferred to me. What is a fair interest rate for my credit score? Who else can I mortgage shop with to get the best rates besides the bank my grandmother has the mortgage with? Who do I talk to about this stuff... the lawyer, the bank...???

Basically, I need some education, and while I've googled my head off, I'm not sure what information to follow. This would be a first time home purchase for me, and my stomach is in knots not knowing what the next few months may bring.

Also, do I pay the mortgage under my grandmothers name and house insurance under her name? The bank that her mortgage is under is aware of her death, so would they accept the payment?

Thank you for your advice, professional suggestions, or websites for review. Any words of caution or advice would be appreciated. As I stated, my dad will be seeing a lawyer next week, but I just want to be prepared.

Are you still in school or are you working? Does your dh work? Have you accumulated savings over the past five years while you were living there? I woud check out an online mortgage calculator, plug in what you can spend for a down payment, use $110,000 as the cost of the house and see if you can qualify for a mortgage based on your husband's and your salary.

Just to add, the house will be appraised as part of the estate work (to determine the value of the estate).

Good luck and I hope it works out for you!

 

[Astro Orbiter]

I hate to be a downer, but though the house was bought for $110,000 it sounds like it was bought 5 years ago at that price and in most places real estate has lost substantial value in the last 5 years - anywhere from 10% - 40%. Your $70,000 mortgage be a much higher % of the value of the house than you think it is - making the mortgage a higher risk to the mortgage company.

How much longer 'til you're done with nursing school? Will you be wanting to move then? Where do you want to live in 4-5 years? If it's in this house then you should figure out a way to make it work; if you'll want to be closer to work, or better schools, or closer to family you may want to work something else out with your dad.

Best of luck -

Deb

 

[MomRN]

I am out of school, have been working full-time since May 09'. My husband is in school and is not working. I can afford the mortgage, taxes, and insurance on my salary. I haven't saved any in the 5 yrs we were here until recently, because I was in nursing school during that time and my little part-time jobs paid for the baby I had during nursing school. My husband had been laid off several times before finally returning to school last year.

My dad would like to just buy the house with the money from the estate and give it to me, if it is possible with what is left over after taxes. At the very least he would let me have the house for what is owed (gifting the equity).

The appraisal on the property is $125,000. I do not think it has lost much value over the years, although it certainly needs some updating and freshening up. The house is the perfect for now... the right area for work and schools. However, the house is set up in an odd way.... with a large living space above the garage and two bedrooms in the main house. We will probably want to move in 5-10 yrs, but I think if we spend that 5-10 yrs and put some money into the house we can increase the value.