los angeles, CA · Member since 2009 · 223 posts · 4 votes
Im trying to buy a house with my boyfriend, I have a job and will qualify for the loan but i do not have enough downpayment. He will provide the rest of the down payment. We are doing it as a 50/50 deal.
1. I am getting a loan through the bank, if i am getting a mortgage under my name only... he wants to be on title.. will the banks allow his name to be on title even though he is not on the mortgage?
2. do i need to document anything else to show that this is a 50/50 deal meaning if we sell we will split the profit 50/50, what documents that we will split profits 50/50?
3. is the deed the only thing that needs 2 name or other things
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
14y
Sarah Jones its "quit claim" not quick claim. A quit claim deed is a very weak form of deed. I think you're saying the loan officer is saying you should first buy the house in your name with the mortgage in your name. Then do a quit claim deed with you alone as the grantor and you and your boyfriend as grantee. Essentially, you are giving the house to you and your boyfriend.
This has bad idea written all over it. He's going to loan you part of the down payment, then you're going to get a loan. Are you going to tell the lender part of the down payment is borrowed? Are they OK with that? There will be a form the lender has you sign stating that no part of the down payment is borrowed. Since it is borrowed (he gets 50% of the profit if you sell) then it will be fraud if you don't disclose that. What if you and he split up? What if one of you wants to sell, possibly at a loss, and the other doesn't? What if one of you dies? What if one of you marries someone else?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
Okay, just to clear up some common misunderstandings. Two people can be the buyers/owners on title, with only One person qualifying for ,and being on the Note (obligation to pay). As Dion said, this is done every day. Confusion may come from the term "Mortgage". The Mortgage is Not the loan, or the obligation to pay (that's the Note). A mortgage is a Security Instrument that simply puts the house up as collateral, for that Note. So any Owner, whether or not they are on the Note, must sign the Mortgage which is simply security for that Note. People consistently use the term Mortgage as the obligation on the loan, which it isn't.
Okay, just to clear up some common misunderstandings. Two people can be the buyers/owners on title, with only One person qualifying for ,and being on the Note (obligation to pay). As Dion said, this is done every day. Confusion may come from the term "Mortgage". The Mortgage is Not the loan, or the obligation to pay (that's the Note). A mortgage is a Security Instrument that simply puts the house up as collateral, for that Note. So any Owner, whether or not they are on the Note, must sign the Mortgage which is simply security for that Note. People consistently use the term Mortgage as the obligation on the loan, which it isn't.
Thanks, Wayne, that is helpful. So does signing the mortgage (without signing the note) just state that we agree that the house is collateral for the note, without obligating us in any other way?
I second @Rosie Piller's sentiments! This thread is great, and is the reason I joined Bigger Pockets as well.
I am curious about some of the same questions about signing a mortgage as a non-borrower. @Wayne Brooks, really appreciated your explanation of the difference between a mortgage and a promissory note. Do you have any insight into whether someone who signed a mortgage, but not the promissory note, can be taken off the mortgage? Of course the person who signed the mortgage has no financial obligation to the property, but would also like to have no liability or association with the property in public records.
In this particular situation, two names are on the deed. Then prior to a divorce, the house was refinanced and the mortgage was signed by both parties, while the note was only signed by one. After the divorce is finalized, is it possible for the lender to remove the name of the party that only signed the mortgage from the mortgage, if provided with a final divorce decree and/or a special warranty deed that deeds the house over to the other party? It would seem the dissolution of the marriage and the fact that one party no longer has any ownership interest in the house could be reason to take them off the mortgage. Or is no way to get the name off the mortgage?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
If one party (the one Not on the Note)signs over the deed to the other party, then they no longer have any ownership in the property. The fact that they signed the mtg document (only) when they Did have an ownership interest becomes irrelevant....the property is still security for the loan and that owner has no obligation whatsoever on the loan. There is no vehicle to be removed from the original mtg though.
I guess there could be an issue of that person “having a foreclosure on their record” if the property were ever foreclosed on though. I don’t know if it would affect future loans if it could be shown they had no liability on the note, simply signing the mtg document solely as an owner. That would be a question for a lender.
4. loan officer suggest close the loan than do a quick claim deed, but if i do that than deed changes can they call the loan due? Is there anything else you guys would recommend to protect the 10% i am putting in
Almost certainly will trigger your loan's due on sale clause. Also, at least in my state of TX, a "quit" claim is a bad way to transfer property.
Also, you likley never want to own a home 50/50 without the other owner being equally liable for the loan as it gives that person no incentive to play nice regarding the real estate. Do you really think he won't ask for his 50% of the house on a breakup? And since he's not on the loan, gives him extra advantage?
I suggest you got talk to a lawyer in your jurisdiction that does both real estate and some family law, as there are a lot of issues here. If those same facts came to me in TX, I would be advising against it. So check with a lawyer in your state.