Take over parent's mortgage but not their home?

[Tommy Sanford]

My parents and I both purchased a vacation home together in 2018 (purchase price $800k). The market continued to grow rapidly through 2022 and I decided to buy them out 5/2022 in the amount of $800k for their existing 50% stake in the property (estimated market value $1,600,000 on 5/2022). At that time, they found, purchased and moved into a new home ~$1m. They paid 20% down and obtained a loan in the amount of ~$800k (at 2.9%). Instead of paying them the $800k, I agreed to pay the loan (for up to 2 years and then come up with the money)- given I would have been unable to qualify for a conventional loan at that point in time (in between jobs). Now, it wouldn't be a problem, but obviously the rates have skyrocketed. The existing loan is with PenFed Credit Union at a 2.9% rate. I have made good on that promise, and have paid the loan every month since then (via transfers directly to my parents, in the amount of the loan payment). As we get closer to the 5/2024 deadline, I'm thinking my only access to the $800k to pay them off would be via a HELOC (now at ~9%). This would represent a monthly increase from $2000 to $6000 (or ~3x). Is there any way I can take over their payments/loan (at the 2.9% rate), while also reducing their "risk"? This will likely be their last home, and the DTI ratio shouldn't affect them, although it would be nice to have an option down the road to wipe that out. They are old-school and like to live debt-free. They view this loan they obtained (based on my discretion), as risk for them. Open to any/all suggestions. This is not like a traditional "subject to" transaction, as I only seek to takeover the loan, but not the property. Thanks in advance for the help!

[Andrew Postell]

@Tommy Sanford yeah, what you are describing just isn't possible on this type of a loan.  Assuming this is a conventional, conforming, Fannie Mae/Freddie Mac loan (which sounds like it is). I would recommend asking them for a 12 month extension.  They already purchased another home...so they can "afford" to have the debt still, so I don't think it would disqualify them from much going forward.  So, just ask for 12 more months and I think you'll see rates be a little better in 2025.