Q: My parents and I purchased a house together in 1996 before I married. The house is worth $145,000 and we owe $102,000 on the mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home.. I live in the home with my husband and son. We have been paying the complete mortgage, taxes, and repairs since our marriage in 1998. My husband and I have decided to purchase a home together. In fact, we have been pre-qualified for a loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds.. and have signed a purchase agreementA Purchase Agreement is an agreement between the buyer and seller for the purchase of property. for a new construction to be completed in August 2001.
I’m selling my interest in our current home to my parents. My mother wants me to sign a quit claim deedA Quit Claim Deed is a deed that operates to release any interest in a property that a person may have, without a representation that he or she actually has a right in that property. For example, Sally may use a quit claim deed to grant Bill her interest in the White House, in Washington, DC, although she may not actually own, or have any rights to, that particular house. to my parents in exchange for $20,000. The transaction doesn’t feel like a true “sale”. I’m worried that executing a quit claim is not enough. My concern is that when my husband and I go for final loan approval, we won’t qualify for the new home because our current residence shows up on my credit report. As you can imagine, everyone is very sensitive when we discuss this subject. I have a real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. attorneyA Real Estate Attorney is an attorney who specializes in the purchase and sale of real estate..
Is my concern valid? Is there anyway to remove me from the mortgage without refinancing?
A: DO NOT sign a quit claim deed without having your parents refinance the mortgage to remove you from the note. Should something happen, you will owe the mortgage but have no claim to the property.
Your real estate attorney should know better than to you advise you this way. Perhaps you should seek the advice of alternate counsel.
You absolutely will have trouble qualifying for a new home with this current mortgage on your credit history, unless you have enough annual income to support both.
Have your parents look into refinancing the home. Then, you can give them a proper deed once your name is off the mortgage, and move on with your life.