Best interest rate when mom's financing the purchase + I will be on the deed

Private Lending & Conventional Mortgage Advice
2yFollow

Best interest rate when mom's financing the purchase + I will be on the deed

Yasmin Mughal
Member since 2024 · 22 posts · 10 votes

I'm starting a  househacking journey and my mom will be financing the home.  I am currently living off a small amount of self employment income, savings and 401k due to health issues so I don't go on the financing per my lender. I will be on the deed and an owner of the home. Originally, my lender said there wouldn't be an issue financing the home as a primary residence because I am on the deed and will be living there. Now he is saying that it's a "second home" mortgage (higher interest rate) because she won't be living there (but if I buy in MD, we still have to pay the state transfer tax because I have owned in MD before.) Come on now, it can't be cherry picked in both directions!

Any way around this?  My mother owns in another state but her home is paid for. Aside from the higher interest rate (I will pay the mortgage), one of the areas I'm looking in charges higher property taxes if it's not a primary residence. She is not going to change her residence "on paper" because she lives in PA where her retirement income isn't taxed by the state. 

1Reply
34 views

Most Popular Reply

Jeff ChisumPro Member
Lender · All 50 States · Member since 2020 · 248 posts · 142 votes
2y

You would need to be on the mortgage as the main borrower.  She would be the non-occupant co-borrower.  

2Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Jeff ChisumPro Member
    Lender · All 50 States · Member since 2020 · 248 posts · 142 votes
    2y

    You would need to be on the mortgage as the main borrower.  She would be the non-occupant co-borrower.  

    2Reply
  • Elias HalvorsonBusiness Member
    HI · Member since 2024 · 225 posts · 130 votes
    2y

    What Jeff said. 

    808-517-6416
    Elias Halvorson C2 Hawaii NMLS#1697041HI Branch NMLS#1244222 585 Reviews
    WebsiteView Page
    1Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    2y
    Quote from @Yasmin Mughal:

    I'm starting a  househacking journey and my mom will be financing the home.  I am currently living off a small amount of self employment income, savings and 401k due to health issues so I don't go on the financing per my lender. I will be on the deed and an owner of the home. Originally, my lender said there wouldn't be an issue financing the home as a primary residence because I am on the deed and will be living there. Now he is saying that it's a "second home" mortgage (higher interest rate) because she won't be living there (but if I buy in MD, we still have to pay the state transfer tax because I have owned in MD before.) Come on now, it can't be cherry picked in both directions!

    Any way around this?  My mother owns in another state but her home is paid for. Aside from the higher interest rate (I will pay the mortgage), one of the areas I'm looking in charges higher property taxes if it's not a primary residence. She is not going to change her residence "on paper" because she lives in PA where her retirement income isn't taxed by the state. 


     Be very careful - you could get into fraud territory quickly. There's no such thing as changing residence "on paper." She either lives in the property as her primary residence or she doesn't. You need to be on the mortgage for it to be considered a mortgage for a primary residence, and she would be the non-occupying coborrower. Your options are A) look at pathways for getting you on the mortgage, B) live with the marginally higher rate and possibly refinance once you're income is more stable and/or if rates were to drop, or C) buy the rate down to whatever number you want. 

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y

    Could she not co-sign the mortgage with you and both of you go on title?

    1Reply
  • Eric Veronica
    Lender · Cleveland, OH · Member since 2011 · 588 posts · 437 votes
    2y

    Other option would be her doing a cash out refinance on her home and using that money to purchase with cash.  

    0Reply
  • Yasmin Mughal
    OP
    Member since 2024 · 22 posts · 10 votes
    2y
    Quote from @Patrick Roberts:
    Quote from @Yasmin Mughal:

    I'm starting a  househacking journey and my mom will be financing the home.  I am currently living off a small amount of self employment income, savings and 401k due to health issues so I don't go on the financing per my lender. I will be on the deed and an owner of the home. Originally, my lender said there wouldn't be an issue financing the home as a primary residence because I am on the deed and will be living there. Now he is saying that it's a "second home" mortgage (higher interest rate) because she won't be living there (but if I buy in MD, we still have to pay the state transfer tax because I have owned in MD before.) Come on now, it can't be cherry picked in both directions!

    Any way around this?  My mother owns in another state but her home is paid for. Aside from the higher interest rate (I will pay the mortgage), one of the areas I'm looking in charges higher property taxes if it's not a primary residence. She is not going to change her residence "on paper" because she lives in PA where her retirement income isn't taxed by the state. 


     Be very careful - you could get into fraud territory quickly. There's no such thing as changing residence "on paper." She either lives in the property as her primary residence or she doesn't. You need to be on the mortgage for it to be considered a mortgage for a primary residence, and she would be the non-occupying coborrower. Your options are A) look at pathways for getting you on the mortgage, B) live with the marginally higher rate and possibly refinance once you're income is more stable and/or if rates were to drop, or C) buy the rate down to whatever number you want. 

    Thanks for your feedback, Patrick. I understand the mortgage will be a second home if she doesn’t make it her primary residence. What about the home itself? I’m even more concerned about property tax rates doubling in WV if it’s considered an investor property despite me living in it.







    1Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    2y

    The tax question with vary each jurisdiction and isn't part of the mortgage process. Here in Charleston, in order to apply for the legal residence tax assessment ratio, all owners have to provide copies of tax returns, utility bills, driver licenses, vehicle registration, voter registration, and the settlement statement/CD, along with an affidavit stating that all owners occupy the residence and do not claim legal residence anywhere else. If any of these are missing or do not reflect the subject property as the primary residence, the county won't approve the legal residence assessment and it's taxed the same as an investment property. 

    In Louisiana, this process is typically much more lax and I know several people who have succeeded in having homestead exemptions on several properties at once (no idea whether it's legal). I have no idea what the process will be in the county where you're buying - you'll have to call the county and find out what they require. My speculative guess is that if you're on the deed as an owner and live there as your primary, you'll probably receive at least some of the tax benefits of a primary residence. 

    1Reply
  • Yasmin Mughal
    OP
    Member since 2024 · 22 posts · 10 votes
    2y
    Quote from @Theresa Harris:

    Could she not co-sign the mortgage with you and both of you go on title?

     I’m going on the loan now. I don’t have much income but also no debt and excellent credit so not sure why I wasn’t on from the beginning.

    2Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    2y
    Quote from @Yasmin Mughal:
    Quote from @Theresa Harris:

    Could she not co-sign the mortgage with you and both of you go on title?

     I’m going on the loan now. I don’t have much income but also no debt and excellent credit so not sure why I wasn’t on from the beginning.


     Yeah, if you don't have bad credit or a horrible debt load, no reason not to have you on it in this scenario. 

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free