Anyone know a lot about home loans & such... I have some questions

[mommy22boys]

I will try to make this as short as possible while still making sense...

When I left my now ex-husband, my parents helped me buy a house. They put down a large down payment for me so that my payments would be smaller. The home is still in their name (we did not want to put it in my name at the time of purchase due to the fact that I was still legally married and my ex was fighting me for everything down to my own panties & socks. No joke.) I make the payments, it's just in their name still.

Now, a few years later, I am getting remarried soon. My fiance and I need a bigger home for our family. Fiance has fine credit. Mine is ruined (thanks to me ex.) Fiance, alone, can't qualify for enough of a loan for what we would need since my income would not be counted. My parents either want us to put this house on the market or they want to sign it over to us if we decide to keep it.

We love our house. It was newly remodeled right before I moved it. But it isn't big enough for our 3 kids to grow in (and we would like to have a fourth in the future.) So we are leaning toward adding on to this house.

What is the best thing to do in this situation. We need to technically buy the house from my parents. Would it be best to wait till my credit gets better & "buy" it for want it's "worth" then use the left over money after paying my parents to add on? Or is there a way to get a home loan and building loan together? Or should fiance just buy it in his name at the value my parents have left on the mortgage then refinance later to build on? (the amount owed on the mortgage is a lot less than the home's value because of the large down payment.)

Basically, my parents just want whats owed so they can pay it off and have it out of their name. If we sell the home, they are going to let us keep the "profit" but if we keep it, they just want to sign it over to us.

Any ideas? Hope that all makes sense. If something I asked about isn't a legal way to complete a home buying transaction, please let me know. I don't know the legalities behind it too much.

[tacatcon]

Hi there

I have no answers other than I think you may have a hard time having them sell it and them give you the "profit" tax wise because it's going to look like a gift. Not only is that going to potentially hurt your fiance come tax time but it may be an issue when they look at how much money he has to contribute to a downpayment and for reserve and the sources, depending on the $ amount you are talking about. Because they only allow for a certain % as coming from a "gift".

I have the feeling you're going to have hard time getting a loan for just what your parents owe on the house. You definitely need to get some professional advice.

But in your state the Housing and Urban Development site lists several organizations that you may be able to ask some questions to. You should be able to get some help for free.
Homeownership Assistance: Iowa

[winter snow]

keep it like you have now-- if your parents would continue -- just keep paying the mortgage---- and if you could-- you can try paying down the mortgage quicker by sending in extra princple payments maybe you can pay it off in 7 to 10 years -- it goes quick and maybe once you have the house paid for-- your parents could quick claim the house over to you.... I would not worry about getting a bigger house--- that only gives you more house work, large utilty bills and a bigger tax bill...

just a suggestion-- and good luck....

winter snow

[IntoTheMystic]

I hate to be pessimistic, but always protect yourself. One thing to think about is that right now you have a lot of equity in your home (thanks to your parents and your agreement with them, which I'm sure they will keep). If your parents sell the home to your fiance before you are married for what is left on the mortgage, all of that equity becomes his. I do not pretend to know the marriage laws, but just keep that in mind. Just to be on the safe side, you may want to wait until you are married before you make that transaction. Or if you don't want to wait, talk to a professional about putting your name on the deed but not on the loan, if such a thing is even possible. (And congratulations on your marriage!)

[motherofmolly]

i have to agree. i would wait til you are married and then get the house in both of your names if possible.

you can check and see if you both can get a loan (both names) and if that is not possible due to your credit, the bank will tell you and then you can figure in his name alone if they allow after you are married.

i would hate for your fiance to purchase the house now, and then you and him break it off and he know owns your home and the equity that went with it and you would have to fight him for it.

[mom2ollie]

keep it like you have now-- if your parents would continue -- just keep paying the mortgage---- and if you could-- you can try paying down the mortgage quicker by sending in extra princple payments maybe you can pay it off in 7 to 10 years -- it goes quick and maybe once you have the house paid for-- your parents could quick claim the house over to you.... I would not worry about getting a bigger house--- that only gives you more house work, large utilty bills and a bigger tax bill...

just a suggestion-- and good luck....

winter snow

I disagree with this. I do not know much about obtaining a mortgage but from a tax perspective there are several reasons that getting this house and its loan in your name asap would be best. if that is not possible due to your credit situation then i agree with the pp posters that the next best thing it is being in your spouse's name (after he becomes spouse).

Putting on an addition is a great idea. We did it before my youngest was born. The real estate market then was much better than now so maybe this has changed but it was much cheaper for us to do the addition than it was to buy a house the size ours became. Also there was no tempaion to over buy. The addition we put on was about 350 sq feet (a new master bedroom, bath and huge closet) and that was really all we needed to make this house work with a another child in the mix, but if we had gone through the trouble of house hunting, closing costs, moving etc I can't see us choosing a new house just 350 sq feet bigger than this one, kwim. I am sure if we had gone house shopping we would have ended up with much higher utility bills and mortgage than we do now. Home equity loans usually have a lower interest rate than first mortgages and you should not have any trouble getting one if you have significant equity so I would worry about getting getting the existing loan balance in your name and then deal with a home equity loan for the addition.

Good Luck

[wookin]

I would suggest you talk to a RE Lawyer to get the best advice. They are better versed in these situations. I would hate to see you do something then find out you shoulda woulda coulda.