Are you aware of a lender calling a mortgage due this year when the buyer took title without assuming the mortgage?
- No. (84%, 53 Votes)
- Yes. (16%, 10 Votes)
Total Voters: 63
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POLL: Are you aware of a lender calling a mortgage due?
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I have a question: I own a townhouse. I had to do the modification during the recession in order to save my asset. Now I can afford it. I have Will but my daughters are not in the Title. Can my two daughters assume my loan in case of my death since the home is in my Will? It is not a Trust. I read a clause on my modification that I need to inform the lender if I attempt to make any change in the title of the house.
Some lenders try to bully survivors by calling due even if there is a trust. However, the first comment is incorrect that lack of a trust means a probate ensues. Holding title in joint tenancy [rarely appropriate for married couples] or community property with right of survivorship allows title to pass without probate. A new form of deed will allow title to pass on death but remain revocable during owner’s life.
If the home is in a family trust then your death will not affect anything. A new trustee will take over the home. (usually) That is what family trusts are for . However it is possible you did not deed the home to the trust. In that case it will go as in your will or by Calif law of intestate succession. So make sure it is in the trust, if you want that.
You can deed i/2 ownership to your son to get a equity loan with him. Especially if you go through the lender who is on the First TD (mortgage) now. You would have to call it a gift and then notify IRS that year of the gift. No tax on gift if you use your lifetime exemption. Check with TAX man.
BUT.. this may affect your estate plan. If you die and bequeath your home to anyone, they take it at the value it was when you died. This is a one-time total tax dodge. So if they sell it there is no gain so no tax, except on whatever value added between the time they got it and it was sold. ZERO if they sell right away,
BUT if you GIFT it to them, when they sell, they must declare cap gain on anything since you bought it because they accept it at YOUR tax basis, which may be very low if you bought it many years ago.
*one idea: IF you have enough equity, Get a reverse mortgage with no payment to refinance the existing loan, and use the extra money for whatever you wanted the equity loan for. It is basically an equity loan with NO PAYMENTS until you die or move out. If you are over age 62 it requires no qualifying, income and credit not a factor ( unless you own rental property. ) So you do not need a co-signor. You keep your title and then when you die your son may inherit it with no tax and then he can get loan to pay off your reverse mortgage, or sell the home to pay it off. It is easy to do,but the limit is about 60% of value for a man your age. The older the better. The points and interest are a bit higher but they loan that too. You pay zero cash out. The loan has 100% negative amortization so the loan balance increases each month until it must be paid. You may wish to take cash out in installments as needed instead of a lump sum to reduce interest costs. They do not charge interest on any money until it is actually paid out to you. Remember , it will pay off your existing loan and then you have NO PAYMENTS . So that is a big savings fro cash flow income. You still must pay property taxes each year and keep hazard insurance policy.
You can put it into a family trust AFTER you get the loan. if you want to.
Trying to obtain an equity line of credit with my son as co-borrower There are no lenders I can locate who will do this unless my son is on title…This is not possible because he doesn’t own the house….I am 82 and can’t do this on my own. If I die tomorrow, he will own the house and how will this affect the family trust? What alternatives are there?