Looking for find out what my options are

[James Cargill]

Hello BP team,

Back in 2006, my mom passed away. She left the house to my sister (Jessica) and me. It was just us 3 growing up so there are no other names for consideration. Jess and I are listed as Joint Tenants on the Deed.

Last month, my sister passed away after a 4 year battle with ovarian cancer. 

In 2008-ish, we refinanced the house. The total amount we owe is slightly under $150,000. The property is worth $550,000 - $600,000 based on other recent sales of like-properties in the neighborhood. 

When we refinanced the house, we refinanced it under Jessica's name only (she was working full-time and I had a part-time job at the time). 

Due to Jess's declining health, I quit my full-time job in IT over one year ago and only recently started working part-time again. Now that she has passed, the logistics of the situation are hazy. Compounded by the struggle of losing her, I'm just not sure what my options are in terms of refinancing the home. I worry that the bank will call the loan due at some point and I'd rather get out in front. Plus I just sleep better at night if everything is clean.

There is a tenant in the unit that has been living there since 2006. His payment covers all expenses, including what we call our "Oh **** Account" for emergencies, and still gives us passive income of $700 per month.

One option is to not say anything as I've heard that folks have left the mortgage in its current state and continued paying without the banks knowledge. While this is fine for a period of time, I would like to figure out a longer term solution.

I've thought of getting a co-signer on the mortgage, as well. I'm just not sure if there are any other options that I'm unaware of that can resolve this concern.

One other note, I am also listed on a $400,000 mortgage where I did a deal with a friend. I provided the downpayment, he provided the monthly income. We're both listed on the mortgage and my rental income was used in the qualification for the loan. 

Any help is greatly appreciated, even if it's "there are no other options.." :)

Thank you so much in advance for your time.

Warmly,
James

[Matt Hurley]

Sorry to hear about your situation! I don’t think that keeping the mortgage in her name is a great idea, I’ve heard tell from other investor friends that it can get hairy if it’s not resolved in a timely manor. 

The good news is that you have an established tenant, with a proven record of profitability, and tons of equity. The problem (if I’m hearing you correctly) is you don’t have money to qualify for a traditional mortgage in your name for $150k. Short answer, there’s always an option!

One option is called a no doc, or asset based loan. There are many investor friendly companies that loan on situations like yours. There's one in California called Patch of Land, which has a 30 year loan that's based only on the LTV, your credit score and your rent roll. No income verification needed. These types of loans are out there, but don't expect them to have a similar APR as a traditional mortgage. You'll pay a little more on the financing, but in this situation it's worth it.

You could also look into cash out refi’s (also no doc/asset based) and pull some $$ out of the house to use for your next investment. Get two birds with one stone. Hope that helps!