Is it possible to take over Parents Mortgage?

[Stacy Nisthal]

I am a longtime reader of the BP forums and love the wealth of knowledge and experience that everyone has on here. This isn't rental property related but it is real estate related, and I am hoping the community can help point me in the right direction to whom I can start asking the right questions as to how my husband and I can take over his parent's mortgage payments. 

My in-laws are in their 60s and own a home in San Francisco, worth approximately $845,000. They owe approximately $180,000 through a 30 year Bank of America loan when they refinanced in 2011. Their monthly mortgage payment is roughly $1100, not including property tax or insurance. My father in law has mid-stage Parkinson's disease, and my mother in law is a homecare giver. Together, their income is very low (under 35k in their 2019 tax returns). 

My husband and I would love to take over their mortgage payment to take over this burden for them, while they still live comfortably in the home. We can afford to take over their mortgage payments, especially if we were able to refinance to a lower rate. We have great credit and have great salaries and our jobs are not at risk during the Covid-19 issue. We also have own a condo in the Bay Area with some equity and have decent 401k and 6 month emergency savings.

Here is our plan (and his parents are on board 100% with this) and what I have found in my research so far- tell me what you think. 

1) Their mortgage is not assumable so it sounds like the remaining amount would be due on sale. That said, I was reading that the Garn-St. Germain act requires lenders to make an exception if the loan is transferred from borrower to child. So- can we just go to Bank of America and see if this is possible? Is it possible to go through another bank or mortgage broker to take over their their loan? Or, if its still due on sale- can we go through another mortgage company and get a loan for the balance?

2) It looks like we have to sign a quit-claim deed for the property to be in my husband's name, which triggers a gift tax. However, it looks like it can be applied to a life time gift tax exclusion of $11.5 million so there would be no gift taxes to be paid. Does this sound right?

3) This would be my husband's inheritance, earlier rather than later. So, when we get the title in his name and we're making the mortgage payments, is it possible to take out a line of credit to purchase rental properties? Our hope is to cash flow the mortgage payment, property tax and insurance, and any maintenance the house might need.

4) We eventually are going to sell our condo and purchase a house in the next year or so. Would this affect our buying power having this mortgage, or actually help us?

Has anyone taken over their parents mortgage? Does anyone have any suggestions or recommendations of who I can talk this through with? I'm assuming I need to talk to a CPA or estate attorney but have no idea where to get started. I'd love to hear your experience and any ideas. Thank you!