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socrateaser
socrateaser, Lawyer
Category: Real Estate Law
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Experience:  Attorney and Real Estate broker -- Retired (mostly)
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My father and I are trying to refinance my house in South Carolina.

Resolved Question:

My father and I are trying to refinance my house in South Carolina. His name is XXXXX XXXXX the mortgage. Because of my lack of income and amount of debt, even with him cosigning the mortgage cannot be refinanced. We are being told he must buy the house outright. He has durable power of attorney for me. That being said, could he refinance the house himself instead of buying it so we can take advantage of the currently low interest rates?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Does the house have value in excess of what you owe on the mortgage? Does the lender require that he own the house outright or could he own an interest in the house? Thanks.
Customer: replied 1 year ago.

The house is assessed at $121,000. I currently owe 107,000. The mortgage and title are in my name alone. Nationstar Mortgage holds the loans. I asked if I could put his name on the mortgage since, in essence, he pays the mortgage. They said no.


 


I am unsure whether the lender requires his sole ownership or not. We had been talking to Quicken Loans about a possible refinance.


 


Quicken Loans has said that if he buys the house either at market value or for the amount of the mortgage, he must put down a 20% down payment.

Expert:  Richard replied 1 year ago.
Thanks. I'm going to opt out because I think given the various issues running through your question I believe you'll be better served by a SC-based expert. Please do not respond to this post as it will only slow the process of such an expert picking up your question. Take care.
Expert:  socrateaser replied 1 year ago.
Hello,

Different contributor here. Please permit me to assist.

Does your father have the 20% down with which to purchase the property?
Customer: replied 1 year ago.

He would have to rearrange some money in order to do so.

Expert:  socrateaser replied 1 year ago.
Thanks,

It seems to me that you could quitclaim title to the property to your father, which would make him sole owner. Then, you would probably have to wait at least six months, because lenders need to have title "seasoned" over time in order to ensure that they are not being tricked into doing a transaction that they would otherwise not be able to make.

Then, your father would refinance the property in his own name, and pay off your old loan. I don't see any reason why a lender would not do this refi, based on what I've described. However, there is no way to accomplish the same thing over a matter of a week or month, because of the "seasoning" requirements. And, if your dad purchases the property and pays the 20% down, then there will be all sorts of closing fees that will increase the transaction costs, and that will nullify the improvement in interest rates.

I realize that you may be thinking that six months from now, interest rates will have soared to new highs. Regardless, I don't believe that there is any option, other than to take that risk, if the goal is to maximize the transaction savings.

Hope this helps.
socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 34817
Experience: Attorney and Real Estate broker -- Retired (mostly)
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