Prevent a refinance or 2nd mortgage

1 Reply

Hi, lets say i fix my mother's credit and get her to buy a house making it a good deal to cash flow (3 unit) a FHA loan the question is; what can i do to PREVENT her for taking a HELOC, refinance, second mortgage etc on the property?

Her partner is a scumbag that once he sees there is any amount of equity will get her to access it to do something stupid with the money and make the deal go south.

I have planned for the rent to be collected by a property manager so he wont be able to touch the money thats due for rent. But how can i prevent him from messing touching the equity? Can i add myself as a co-borrower so that why if i don’t sign any loan request he can’t get it?

Thanks in advance for your answers

Originally posted by @Eladio P. :

Hi, lets say i fix my mother's credit and get her to buy a house making it a good deal to cash flow (3 unit) a FHA loan the question is; what can i do to PREVENT her for taking a HELOC, refinance, second mortgage etc on the property?

Her partner is a scumbag that once he sees there is any amount of equity will get her to access it to do something stupid with the money and make the deal go south.

I have planned for the rent to be collected by a property manager so he wont be able to touch the money thats due for rent. But how can i prevent him from messing touching the equity? Can i add myself as a co-borrower so that why if i don’t sign any loan request he can’t get it?

Thanks in advance for your answers

First, there is no equity in a house purchased with an FHA 3.5% down loan. Second it will be years before any equity is built up. Third, you would have to qualify to be on the loan (income. credit, etc) and providing you do qualify, you would also be on title and then yes, your signature would be required but she could still get credit cards, fail to pay them and wind up with a lien against the property. A better solution is to record a lien by you for $20,000 against the house and record it properly. Then, anytime someone applies for a loan against the house you have to be notified since you show up on the title report. And, until there is substantial equity built up above the mortgage on the property plus the $20,000 no bank would allow the loan anyway.

 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here