What is the best way to transfer mortgage loan to my brother?

[TheZealous]

Hello,

I am currently have a house mortgage and making payment monthly with my house. I want to give this house to my brother as a gift. That said, I don't want to "sell" it to him. He will take over the mortgage payment and I move on buying another house. What are my options here? Upon a few google search yield me the result that my brother will need to apply for a mortgage loan with a bank, then go purchase the house from me. This is not the way that I prefer... because I really don't want him to put down 5% payment or anything like that. Do you think there are any other options for us to move forward? My brother will apply for a mortgage loan and get the new interest rate... but then my theory is that I just want to transfer the loan to him... Once everything is done, my debt ration to income will free up some room for me to purchase a new house...

Thanks,

T.

[Anonymous]

You won't be able to just hand off the loan; there is no incentive for the lender to reassign it. You can gift equity in the home, but you'll have to get an appraisal and have an appropriate amount of equity to cover the down payment on the loan. If you've already accrued 20% equity that can be verified by an appraisal, your brother won't owe anything down. If you haven't accrued that much equity, he'll have to bring some cash to finish up the downpayment. Aside from filling out some forms for lifetime gift tax exclusion, this should be a pretty simple transaction.

See this link for an explanation. The concepts should be relatively simple, but I'm happy to answer any questions you might have.

[medicgrrl]

Call your current mortgage lender and ask them if you have a loan with an assumption option. Also, if you do, ask them if you'll be released from liability.

[TheZealous]

So after a few months trying to figure out a way how to handle this... It seems like the bank want to have my sister apply for a new loan and proceed as if she is going to buy this house with down payment and closing cost. I spoke with a mortgage broker and she suggested doing the following.

If I am going to start a Residential Lease and have my brother sign a contract that he will lease this current home for x number of years, then the Under Writer will consider to take the current mortgage loan out of my debt-to-income ratio and then eventually will pre-approve me for a loan amount of $250k. Do you guys think this is a legit way to go?

Thanks everyone for helping me out so far.

TZ.

[Anonymous]

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@TheZealous wrote:

So after a few months trying to figure out a way how to handle this... It seems like the bank want to have my sister apply for a new loan and proceed as if she is going to buy this house with down payment and closing cost. I spoke with a mortgage broker and she suggested doing the following.

If I am going to start a Residential Lease and have my brother sign a contract that he will lease this current home for x number of years, then the Under Writer will consider to take the current mortgage loan out of my debt-to-income ratio and then eventually will pre-approve me for a loan amount of $250k. Do you guys think this is a legit way to go?

Thanks everyone for helping me out so far.

TZ.

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Yes, it is a legit way to go.  

[kc0039]

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@TheZealous wrote:

So after a few months trying to figure out a way how to handle this... It seems like the bank want to have my sister apply for a new loan and proceed as if she is going to buy this house with down payment and closing cost. I spoke with a mortgage broker and she suggested doing the following.

If I am going to start a Residential Lease and have my brother sign a contract that he will lease this current home for x number of years, then the Under Writer will consider to take the current mortgage loan out of my debt-to-income ratio and then eventually will pre-approve me for a loan amount of $250k. Do you guys think this is a legit way to go?

Thanks everyone for helping me out so far.

TZ.

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Very legit. Can your brother do a refinance for deed?

[TheZealous]

No he cannot. i thnk the best way to go about this is to have it on paper to rent out this current house and hopefully the underwriter will let me obtain a new loan.

[Anonymous]

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@TheZealous wrote:

No he cannot. i thnk the best way to go about this is to have it on paper to rent out this current house and hopefully the underwriter will let me obtain a new loan.

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I agree.  I will be following so update once you start the process.. Will keep fingers crossed for you that it all goes well.

[kc0039]

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@TheZealous wrote:

No he cannot. i thnk the best way to go about this is to have it on paper to rent out this current house and hopefully the underwriter will let me obtain a new loan.

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He will. Signed lease agreement effective the day AFTER you close on your new home. We'll use 75% of the lease and subtract PITI(A). Out comes either positive rental income or negative rental income.