Quick Question re: Real Estate/ Marriage

[Schema Thing]

I have good credit.

My fiance has lousy credit.

She also has a house mortgage that just got kicked up to 10% apr, with more adjustments to come in Oct and every 6 months thereafter. She can't afford it to go higher.

If we are married, is there any legal reason I can't buy her house from her?

An added wrinkle is that the city has expressed interest in the property, but not at stellar prices yet. they have torn down several houses next to her. There is talk that they wish to do a commercial project with the land, in which case they cannot just imminent-domain her house (under new Texas rules), but there is also talk that they may want the land for a greenbelt or park (in which case they could imminent-domain).

Also, in light of the forgoing interest by the city, would it be legal to "rent" the house back to her if I bought it, in effect showing that it has investment worth to me?

Thanks to any knowledgeable people in advance.

[Kingshakabobo]

1. If you are not already on title she can quit-claim you on......

......the title and then you can refinance with the loan or "note" in your name only. She can stay on the title "only." She won't need to run her credit but you won't be able to use her income.

[flvegan]

8. That's not completely true

(at least not in the states I deal with).

If the poster is going to take a purchase money mortgage, it'll have to be a Warranty Deed of some kind, and she won't be in title at all, or she'll have to sign the Note and enjoin in the mortgage.

I think that she should deed the property to him, with him taking an institutional first mortgage. Then, post-closing, he should deed it as himself, joined by his wife (if they're married at this time) to the both of them.

Mortgage is in his name, title is in their name. The banks never do a 90 day post closing update, so they'll never know.

[Kingshakabobo]

12. They don't need to handle it as a purchase at all. That's the point I should...

.....have made more clear. Deeding the property over to him might trigger all kinds of fees, taxes and a depletion of her lifetime write-off. In the course of the refi they can quit-claim him on and do the note in his name only keeping her on title.

I'm a mortgage banker in Illinois but I do some business in Texas -I haven't handled one of these in Texas though.

A local lender should be able to tell them if it is kosher.

[flvegan]

14. But if she's in title

she has to sign the mortgage. Now, the loan may not get run on her, but she's still got to sign off if she's in title. Can't they run the loan through on JUST his qualifications with her more as a "co-signer" on the loan (with both in title)?

I'm a manager for a national title underwriter, but I haven't done Texas work. I'm just relating my experience.

[Kingshakabobo]

15. Yes, she will always have to sign the mortgage piece........

.....to waive homestead(if any) and as an acknowledgment, as an owner of the property, she knows a lien is being placed against the property.......But she DOESN'T need to sign the note. She wouldn't be a co-signer - she wouldn't be anywhere on the note.

Fannie/freddie doesn't care. Most lenders won't care.......maybe a few portfolio lenders and lenders that like to add a layer of 'rules' to fannie's regs.

For the OP:

Note = the loan document describing the terms of the loan - interest rate etc.

Mortgage = The document securing the the note as a lien on the property.

The reason I spelled these out is because people call their loan a 'mortgage' when it is really a loan secured by a mortgage.

[flvegan]

16. Right

I didn't know that the lenders were that disinterested in the contract. Good to know.

Now the question comes into play if she has judgments or tax liens against her name. "Bad credit" can mean many things.

[Schema Thing]

17. Thanks for your help gentlemen

I may send you a pm or two when I start working on this.

Thanks again!

[Mr. Ected]

2. Refinance It

Convey title into your name, take out a loan in your name, then quit-claim the property back into your joint names after the closing, subject to the new outstanding mortgage.

Make sure you keep both of your names on your homeowner's insurance policy.

[Kingshakabobo]

6. They should be able to keep her on the title at all times.....

so it won't be handled as a purchase transaction. They can refinance it with her name on title only - not on the note.

I'm a mortgage banker. We do these all the time.

[Liberal In Texas]

11. This sounds exactly right.

We had to do something similar when we re-fied our house about a year before we got married.

(I had some totally false information on my credit report, so it was easier just to drop me off the loan than wait while I fought with the credit bureaus.)

It's NBD, one person on the loan, 2 on the title.

[Kingshakabobo]

13. Furthermore, they shouldn't have to be married......

I deal with mostly gay clientele so I'm used to dealing with non-married borrowers.

Like you said, no big deal.

Structuring it as a purchase will trigger potential fees - transfer stamps, owners title policy AND loan policy (instead of loan only), survey, reduction of her life-time profit exemption(if they show it as a gain) etc. etc.

[CottonBear]

3. I'd contact a real estate lawyer. n/t

[flvegan]

4. Will you be married when you "buy the house from her"

and will you be getting a mortgage to do so?

This property is in Texas, yes (from your Profile)?

[Schema Thing]

7. Yes

and yes

and yes: Texas


:D

[flvegan]

10. You'll need an expert in your state, but

in the several states I work with, you'd be out of luck. She still needs to enjoin in the mortgage. However, you MAY be able to find a broker/lender that'll run only your credit, so the loan will be based on you and not on her. If this wasn't going to be your homestead, it might be different as you can own non-marital, non-homestead property, but you can't mortgage it without her signing as well.

If you're sure that this is what you need to do, do it before you're married. She deeds to you, you take an institutional first purchase money mortgage as Mr. AchtungToddler, a single man. Post closing (30-45 days), you deed it back to the both of you. Title is perfected in fee-simple, but the mortgage is all you.

[SoCalDem]

5. As long as you are not married, I don't see why you are not just "an interested buyer"

You are no relation to her legally..

If you can qualify on your own, I see no problem with it..

I would leave out the "renting it back to her" angle when you start the process, though..

It might be worth the money to see a real estate lawyer..

But it sounds like you could to what you planned

[truedelphi]

9. I'd call around and find a law group that handles low income stuff

If your wife's income is widgy - and with creditors all over her - it may well be widgy even if she's making more than poverty level, you two should find her some poor people's law clinic or low priced attorney

Help her spend a little money on someone with a legal brain re: real estate in Texas.

I spent $ 150 for a half hour consult in the San Fran Bay area - it was the best money I ever spent in terms of things I needed to know.

Buyer beware however: get a recommendation for the attorney you set an appointment up with.

You could start out by calling higher priced attorneys in your area and say you are helping out a friend who is lower income than their clients probably are - do they know of a good fit for her problem.

Any attorney, knowledgeable or not, can set up an appointment with a client (that is, you and your wife) and offering little or no advice - walk out with your money in their pocket.

[Schema Thing]

18. Sounds like good advice.