Cash purchase, adding person to title who will take out loan

4 Replies

My husband and I just purchased a home for cash (because it allowed us to get the best price) in our Rental Properties LLC name. We would like to add our daughter to the title during the closing process, and then have her take out a loan to pay us for the home so she can live it. She is a first time home buyer, and we would like her to build her credit and own equity in the home. She has a great credit rating and has already qualified for a loan. Is this possible, and if so, what is the best loan strategy?

@Kelli Tarantino

Simple enough. You take title in the LLC as that is what is on your purchase contract. At settlement, after the Seller has left the closing, you have the Title Company or Attorney draw you up another deed. You can take title in all 3 names or convey the property in a no consideration deed to your daughter. Check with your Attorney as to whether any additional transfer taxes are involved. If you take title in all 3 names, all of you will have to sign on the loan. It's a great way to help your daughter move forward in the finance world.

Rich - thank you for your quick reply.  It has been very helpful!

Sell the property to her if she qualifies for a purchase money mortgage.

If she's on title she would be refinancing and subject to different guidelines.

If you really want to help her out you can gift some equity... I'm sure some lenders on here will provide further guidance.

You should discuss this with your accountant.  Putting her on the title would constitute a gift and has tax implications.

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