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Can I get a commercial loan without 25% down?
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Why not just transfer ownership into a living trust that you are part of? When they pass there is no probate. You’re already an owner. Getting a better interest rate helps affordability, but it also triggers the sale of the home which is a tax event if they exceed the capital gains limit. I also don’t want to create a landlord tenant relationship with my mom. When I do anything for family I give without any expectation of return. I’ll give money I don’t loan money. I’ll co-sign for my daughter, but I expect to pay that payment if she can’t.
Being landlord to your parents presents issues if they don't pay. I'd 100% be willing to evict my mom, but would you?
I've already thought ahead about all of that and have it figured out so not worried about that part.
You get a step up in cost basis if you inherit the property instead
I make much more money than my parents and have an excellent credit score. I ran it by a mortgage broker and my mortgage payment would be significantly less than what my parents are paying now. So I thought I could buy it and assume the current balance and then lower their monthly expense. I leverage HELOC etc. to buy rental properties so in my mind it's another way to get automatic equity that I can leverage for my other investment properties. The only snag I saw, was around the Tax piece which I am aware of but put it on FB to see if there was anything else I have not considered.
You’re probably getting sold by your mortgage broker. The “significant” savings makes no sense in this interest rate environment. Did your folks get a quote for a 30yr refi on their existing to compare against yours?
The flip side of the coin is maybe you’re trying to save them $100/month so you can add their property to you “empire”.
They owe less than $100k but what's the market value of the house?
I'm seeing lot of assumptions and a fair amount of judgement based on those assumptions in the comments so could you clarify your overall objective?
It sounds like:
1. You are familiar with purchasing and owning multiple properties at once,
2. you could secure a lower interest rate via HELOC or other means than they currently pay, and
3. you are aiming to decrease their monthly expenses while passing the property along to you (minimizing the tax implications for both parties)
Are you in a state that requires disclosure of sale price? The only losers in this scenario may be the neighbors 😂
Subject Expert
How bad is their interest rate? How long have they owned the home? Did you confirm that you can qualify for the mortgage, and does the mortgage company know it won’t be your primary residence?
Subject Expert
Do you already have a mortgage? And/or are you paying rent?
If you are buying a house that isn’t the house you are going to live in, you’ll need to qualify for that mortgage above your existing expenses. As an investment property, with higher interest rates right now, that may be a bit harder than you think.
If your parents have owned this house for more than a year, I’m curious why the rate you would get would be so much lower than their rate. Did they have bad credit? Did they never refinance during the historically low rates in late 2020 or early 2021? I’m very confused as to why you are even needing to assist in this situation.