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 mortgage. 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 loan and have signed a purchase agreement 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 deed 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 estate attorney.
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.