Buying a house from my Dad

[JOSH ELIOT]

Hi Everyone,

I’m buying a house in California, my Dad is the seller.

There is $350k left on the mortgage. All Dad wants from me is $100k. Originally, I was going to get a loan for $350k from my credit union and give Dad $100k that I have saved up. I was going to do all of this, until a woman at a credit union gave me some advice.

She said to do it this way:

My Dad should add my name to the title, then in 30 days he does a quit claim and takes his name off the deed. At that point I go to the credit union and re-fi the house in my name only (maybe a “cash out re-fi” if I can?) based on my credit score and current rate.

1.

Will the credit union re-fi the house in my name immediately after he takes his name off the deed? 

How long will it be before the credit union re-fi’s the house for me if not 30 days? 

I want to re-fi because Dad is paying more than $1,000 a month than I will when I re-fi, and I want o lower mortgage payment. (The woman who helped me also said not to tell the credit union that I’ll be using for the re-fi, that I’M doing this, she said they won’t like it).

2.

Is this safe?

Is this legal?

Foolproof?

Can something go wrong and screw up the whole deal? 

I would imagine I’ll still need title insurance and an escrow agent, but they’re not there to help me navigate the rough waters so much if something goes wrong, from what I understand. I’m a bit nervous about doing it this way, trying to make sure I do everything properly.

3.

I have to give Dad his $100k. How do I explain this to the IRS at the end of the year of we're not treating it as a sale for him? The money isn’t going to his bank, it’s going to his financial advisor.

The woman suggested doing it this way because it will save Dad and I a bundle of money of fees. I asked her what fees but she didn’t get specific.

Thoughts? If this is a tricky way to do it and something may go wrong, I will just do it the original way.

Thanks everyone!