Post # 1
My in-laws are moving in April and have given FI and I the house. They have a little over 3 years left on their mortgage so all they are asking is that we make the remaining payments and then it will be ours. Sounds all fine and dandy and the best of both worlds. We will own a house and won’t have to spend a lot on it. However, I keep thinking of the worst possible situations..
My parents have been renting/selling property ever since I can remember so I’ve witnessed how poorly things can go. We were actually going to buy a house on contract through them but we decided we couldn’t move that far away from our jobs. I figured this time around, we would still purchace on a contract of sorts just to protect everyone involved if something were to go wrong, but FI doesn’t agree with that. He thinks by me asking for everyone to sign a written agreement that’s saying I don’t trust his parents. It’s not an issue of trust, it’s an issue of legality.
I would hate to pay on a house for 3 years, the bank gives over the deed to the owner (his parents) and we never see anything of it.
If FI were to pass away while we’re paying on it, where would I be left? They don’t particularly like me right now.
If both of his parents were to pass away, his sister would have say in the house and I’m pretty sure it wouldn’t go well.
I’m sure everything will work out in the end, but it’s just scary to think that they don’t feel it’s necessary for any kind of written agreement to be present.. Thoughts?
Post # 3
Why don’t you buy the house from them (i.e. the cost of the last 3 years of the morgage)? Then they have no legal issues if you defalt on the loan, and you not only build credit and equity with the morgage, but the house is in your name rather than theirs.
FYI – if my inlaws ever offered the same to us, we would have the same concerns as you (we get along with our inlaws just fine) – I think your concerns are perfectly normal!
Post # 4
They can’t really just give you the deed. They would have to gift the home to you and pay a bunch of taxes on it I believe. Something to look into.
Post # 5
I guess we didn’t think of paying off the house with our own loan. But then we get in to whether the bank will approve us and how much more the monthly payments would be. But that would probably be less stress in the long run.
Post # 6
@lambjo: Your concerns are completely valid. I would highly suggest talking with the bank of assuming the loan, or them selling it to you for a little above what they owe. Keep in mind though, if you take out a new loan to pay for it, the bank will likely require some inspections which will include closing costs.
Their mortgage may not even allow someone else to live there. I would definitely not be paying a mortgage while someone else’s name is on it and the deed.
Post # 7
@lambjo: Say they owe ~$15,000 and you apply for that much, I don’t see any reason why a bank would pass on that, especially considering the house is probably worth at least $100,000
Post # 8
It just concerns me that they’re acting like we’re buying a loaf of bread, not a freaking house. Ugh.. sometimes I wish we could pay everyone in candy and sunshine 🙂
Post # 9
@lambjo: You can’t just start making their mortgage payments. You have to refinance the mortgage so it’s in your name, not the in-laws. You also need to have a deed recorded to show that you guys now own the house, to preserve the chain of title and all. I recommend getting an attorney to figure all this out for you. Tell your FI it’s not about not trusting his parents or whatnot, it’s the best for all parties.