Investor / Lender · Seattle, WA · Member since 2014 · 1k+ posts · 730 votes
My parents currently own a home in Seattle, Washington. It's worth about $160k, and they owe an FHA loan of about $140k on it. I recently purchased my first home and moved my parents in with me so that they can cash flow the home (currently $300 a month) and keep some extra money to themselves.
My parents don't make a lot of money and are in their retirement age. There's a lot of low-income programs they can qualify for, but because they have this home as an asset, they aren't able to qualify for those programs. I want to take the home out of their name and into mine, while keeping the financing (since it has such an incredible rate @ 3.25%). I don't want to sell it because it has sentimental value to them; it was their first and only home.
Any advice on how to do this? I heard about "Subject To", but not sure how well it works in WA state. It sounds like the bank could possibly foreclose on the house if I do this...?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
Not sure what sort of "low income programs" you're talking about. But they only have $20K of equity in this house. That's not much of an asset. They would only net a few grand after selling costs if they sold this. If they sell it to you subject to the existing loan balance, then it could be viewed as them gifting you $20K. Some programs, such as medicade, will do a five year look back when they pay out benefits. If they find a transaction like this, benefits will still be denied.
Subject to does have the risk that the loan can be called by the lender. If that happens, you would need to pay off the lender or else they will foreclose.
Investor · West Jordan, UT · Member since 2014 · 45 posts · 31 votes
12y
My first question would be to check and see if the FHA loan is assumable. If so, all you have to do is qualify and you can assume all terms of the current financing and have it out of their names.
The subject to clause is something to worry about, however i used to be a loan officer at a local credit union, and that was never an issue. As long as the bank gets their money, most won't ask questions.