Home Buying in 80001>Question Details

Jason Kirby, Home Buyer in G.L. Lowery Industrial...

Can I buy my mother's house for the remainder of her mortgage balance?

Asked by Jason Kirby, G.L. Lowery Industrial Park, Groveport, OH Thu Oct 3, 2013

Hi all,

A few months ago my father passed away and my mother cannot continue to make the house payment. I was wondering if I can purchase the house from her for the remainder of the balance or if there are laws that prevent this. She talked to a real estate attorney and he said something about drawing up papers to allow her to sell it to me. I would think that my lender might get in the way of this proposition. I have excellent credit and I know I pre-qualify for a home with a higher mortgage than this one (I was planning on buying a house but this is more important to me).

Sorry if I sound naive as I'm just not familiar with this stuff.

Help the community by answering this question:


Buying her house, and her existing mortgage loan are two separate issues. Your mother can sell you her house for whatever price you two agree upon. However, in order for clear title to pass to you, any loan(lien) against her house(her mortgage) has to be either paid off, or assumed by you, lender permitting( That question could only be answered by her lender). You could certainly create a new loan by your lender and pay off her lender and that would work. Be aware that there are more closing costs associated with the sale of her home than just paying off her existing loan. Real Estate taxes, title insurance, interest on her existing loan, water escrow, title company closing fee, attorney fees, etc, all have to be dealt with by your mom. They are what we call closing costs. If you take out a new loan to buy her out, then you also will have closing costs charged as part of that transaction. So consequently, your mom would need to probably charge you more than just the loan balance on her mortgage, in order to cover those other expenses. Sounds like you need a Realtor or an attorney to advise you, and help you work through the details.
2 votes Thank Flag Link Thu Oct 3, 2013
Yes it's true that you can add yourself to the mortgage, You can have title in your name but the bank is the one who owns the house and they'll have her on the hook financially no matter what you do. They won't finance this house for you without 20%
unless you're going to make it your home. Can't have it in addition to your own home.
Flag Thu Oct 24, 2013
You have other alternatives. One is called a wrap-around mortgage. With a wrap-around mortgage, you would leave your mother's mortgage in place, and she would essentially be your lender. You could make payments to her, and she would use those payments to continue to make payments on her existing loan. See the link below for a better explanation of a wrap-around mortgage.

A land contract is similar to a wrap-around mortgage. Again, your mother would be your lender using this method. Here is a link that you might find interesting that explains the basics of a land contract. http://www.wisegeek.org/what-is-a-land-contract.htm
If that link does not work, just google "land contract."

As you might imagine, these types of financing carry their own unique risks, but a good attorney will help to minimize those risks. These methods have the potential of saving you and your mother some costs of refinancing, so you could use those savings to help pay the attorney fees.

Good luck!
1 vote Thank Flag Link Thu Oct 3, 2013
Tony...I'm confused...assuming the house is worth more than mom still owes, can't Jason get a loan without a downpayment, since the downpayment is the basis of LTV?? For example, if the house is worth twice what mom owes, the LTV would already be down to 50%, so Jason shouldn't have to put down anything, right?
1 vote Thank Flag Link Thu Oct 3, 2013
Yes, you can legally buy a home for a $1 if the seller is willing. You could handle it in one of two ways.

Option #1: Put your name on the deed along with your mother and make the mortgage payments for her. Benefits: Your credit is not affected by having a loan attached to it and you mom gets to stay in the house.

Option #2: Have a Title Company (much cheaper than a real estate attorney) prepare a Warranty Deed to transfer 100% of the ownership to you. To show good faith to your mother, I personally would also record a life estate which allows your mom the right to live in the property until her death. You would then need to get a bank loan to pay off her mortgage at the time of closing.
1 vote Thank Flag Link Thu Oct 3, 2013
Lynn's answer is some great advice. There's nothing specifically prohibiting this type of transaction, and you could likely justify it to your lender.

I'd just like to add one thing

Just be aware that you will likely also have to make a down payment as well. This down payment will vary depending on whether you live in the house or not. If you intend to reside there then you can finance it as an owner-occupied primary residence. You'll have more loan options and you'll probably only need 3.5% to 5% depending on the program. If you are not going to live there then this would be considered an investment property and would likely require a 20-25% down payment.
1 vote Thank Flag Link Thu Oct 3, 2013
What I believe her attorney is going to draw up is the real estate contract. You either need an attorney or a realtor to complete the process. She can "sell" the house to you for whatever price she wants, example, the remaining balance of the loan. You could work with her bank on that "assumption" or you could get your own financing. But regardless, you have to follow the proper procedure for transfer of title.

You do not sound naïve. There are many questions when it comes to real estate and much confusion. . That is why I always recommend a realtor to someone who wants to buy or sell real estate. An attorney will draw up paperwork, a realtor will do the paperwork and coach you as well.

I live in Arvada and love Arvada. If you have any questions please do not hesitate to call me direct
Rhonda Haefele
Your Castle Real Estate

Have a great day.
1 vote Thank Flag Link Thu Oct 3, 2013
Pay the house off for your mother and have her deed you the property.
1 vote Thank Flag Link Thu Oct 3, 2013
Does she have an "assumable" loan? If so, you can assume her balance if you qualify with her bank. FYI, usually only FHA and VA loans are assumable.
1 vote Thank Flag Link Thu Oct 3, 2013
I don't believe it is assumable. We've been to her bank to see if I could assume the loan and they didn't really have much to offer for that route.
Flag Thu Oct 3, 2013
If the appraised value of the house is higher than pay off, and the loan is assumable~ you most probably can do it( I'm in CA). Discuss your options not just with your attorney but with your CPA, lender, escrow and title rep.
Good luck!
0 votes Thank Flag Link Sun Nov 23, 2014
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