Taking title and refi brother's property to gain 200K equity

2 Replies

My brother has bad credit and currently has a mortgage with an interest only variable loan on his primary residence. He asked if I could add my name to refinance the property to get a better rate (30 year fixed). Luckily, the property has increased twice in value. In exchange, he is willing to give me 200K in equity and promises to continue to pay PITI. All of this would be in writing of course.

1) Would you agree to this?

2) By adding my name to title and refinancing, would this trigger any tax implications? Increase in Property taxes? (property is in CA)

3) Is there anything else you would be concerned about by doing this? 

4) If I were to seek professional advice, would it be better to go to a RE attorney or CPA?

Originally posted by @Jake L. :

My brother has bad credit and currently has a mortgage with an interest only variable loan on his primary residence. He asked if I could add my name to refinance the property to get a better rate (30 year fixed). Luckily, the property has increased twice in value. In exchange, he is willing to give me 200K in equity and promises to continue to pay PITI. All of this would be in writing of course.

1) Would you agree to this?

2) By adding my name to title and refinancing, would this trigger any tax implications? Increase in Property taxes? (property is in CA)

3) Is there anything else you would be concerned about by doing this? 

4) If I were to seek professional advice, would it be better to go to a RE attorney or CPA?

 You ask the question: "4) If I were to seek professional advice, would it be better to go to a RE attorney or CPA?" It is your brother that needs professional advice and I think it should be a competent counselor. Giving away $200,000 in equity for you to do this is not from a stable mind. If I liked my brother I wouldn't do it. If I wanted to take advantage of my brother I might do it . . . But, the future consequences might exceed the benefit. Find out what is really going on. He may have a gambling or drug problem or be in some other trouble. There is a reason he has "bad credit". In six months he can have "good credit" if he does the correct & responsible things. Some banks will give 70% LTV 30 year fixed loans to people with "bad credit" because they have a lot of equity. Check around. Rational people don't give away $200,000 just to get someone to help them refinance. Yes, there are a ton of title, legal, tax and liability issues. They can all be worked out, don't get me wrong, but it would be bad advice to lead you in that direction.

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