? about mortgage and deed

Background.

A friend and I are buying a house on a big piece of property. Cost of house/property is 370,000.

Our goal is to renovate the current house and build a two family house on the property.

Catch is my friends aunt is putting out the money to build the new house (250,000). And at that point she will live mortgage free and we will just cover the mortgage.

Any advice on how this work. If she wants to be on the deed but not on the mortgage is that doable?

Re: ? about mortgage and deed

I do not know all of the exact stats but I do know she can be on the deed but not the mortgage.
I would also think of the taxes that you will incur after the reno is done. They will be higher so make sure you can swing the mortgage with the new taxes too. Good luck !

Re: ? about mortgage and deed

Nice Aunt. Your friends Aunt should hire an Attorney. She has no protection and can lose the house if your friend and you can not pay the mortgage. Sorry to burst your bubble but don't you think the Aunt should know all the risk?

Arthur

Re: ? about mortgage and deed

You two can make a quit claim deed to you two and her the same day or shortly after the closing.

Re: ? about mortgage and deed

So, there will be 2 houses on your lot? Do you need to subdivide or is it already 2 lots.

I would think that she should be on the deed to the part of land she is giving the $250K for.

You can probably subdivide (if needed) then you and your friend can deed that part to her (the lot where the new house is going) I'm assuming she is going to live in the newly built house?

Re: ? about mortgage and deed

Your friend can be on the deed and not necessarily on the mortgage or viceversa. But as someone mentioned earlier, your friend might want to reconsider considering all the legal implications in the event that later on down the road, you are unable to make the payments or things do not work out personally between the two of you.
Also, please keep in mind the taxes once you rebuilt if they will be raised or not. Last but not least, your friend should also keep in mind that if she/he wants at some point to claim property taxes/interests on income taxes, there are certain guidelines for this as well. You should both sit down with an attorney and go through all the ramifications that this can entails so that you both know what you are getting into and everything is clear in writing as well in the event that anything happens down the road. Best of luck !

Message edited 4/17/2010 6:38:58 PM.