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Updated 2 months ago,
Buying from In-laws
My father in-law has not been living in his house (primary residence) for nearly a year. My wife and I approached him to discuss buying it from him since it is simply sitting. The question I have, is there a legal way to assume the mortgage since he has such a great rate? We would bring in compensation to make it worth it too him and he seems to be open to the idea as long as we can figure out a way to do it without too much penalty on his side. If we can avoid paying a "gift" tax that would be great! Thank you for your advise.
Many residential loans are non-assumable. If this is the case, you could utilize a strategy called "Subject To." In short, a buyer takes ownership of the property while the seller still remains on the existing mortgage. The buyer maintains the property and pays the mortgage. Only when the buyer pays off the mortgage or refinances it will the seller be released from the mortgage.
Quote from @Cory Morris:
My father in-law has not been living in his house (primary residence) for nearly a year. My wife and I approached him to discuss buying it from him since it is simply sitting. The question I have, is there a legal way to assume the mortgage since he has such a great rate? We would bring in compensation to make it worth it too him and he seems to be open to the idea as long as we can figure out a way to do it without too much penalty on his side. If we can avoid paying a "gift" tax that would be great! Thank you for your advise.
would this be a primary residence or an investment property for you? is his current loan VA, FHA or USDA? If so, the loan would assumable. If it is conventional then the loan is not assumable.
- Jay Hurst
Quote from @Jay Hurst:
Quote from @Cory Morris:
My father in-law has not been living in his house (primary residence) for nearly a year. My wife and I approached him to discuss buying it from him since it is simply sitting. The question I have, is there a legal way to assume the mortgage since he has such a great rate? We would bring in compensation to make it worth it too him and he seems to be open to the idea as long as we can figure out a way to do it without too much penalty on his side. If we can avoid paying a "gift" tax that would be great! Thank you for your advise.
would this be a primary residence or an investment property for you? is his current loan VA, FHA or USDA? If so, the loan would assumable. If it is conventional then the loan is not assumable.
It is an FHA loan. We plan to use it as a rental property/investment. I am new to real estate, how would you suggest I start to assume the loan?
With an FHA loan there are residency requirements, but not very long or stringent. You might simply have him assign the deed to you or add you to the deed and continue to pay your father-in-law's loan while renting it out. You can also have him place the property in a trust for you as you continue to pay off the loan and control the property. Have an attorney advise and set this up for you.
You need to know how soon after purchasing a home with an FHA loan you can legally sell it. The answer to that is typically 90 to 180 days is best, but in reality, you can sell it whenever you need to.