Can someone please explain exactly how a foreclosure is executed if two separate people buy a house together?
Question:
Answer:
The mortgage company should just put you on the deed for the first closing -- the purchasers can put whoever they want on the deed to the home, in most cases.
But even if the mortgage company won't put you on the deed, your parents can execute a quitclaim deed right after the closing, in which they transfer ownership from just themselves to both yourself and themselves. The lender wouldn't have any say in this matter.
If your parents pass on in the future, the actual ownership type will determine who gets the 2/3 property interest. If you own the home as a joint tenant, their ownership will automatically pass to you. If you own it under tenancy in common, your parents' ownership will pass to their estate and be distributed according to their will. You might be on the will as receiving the property anyway, but joint tenancy automatically passes the ownership to you.
You can get your name put on the deed either at the closing or after closing. How you and your parents and the mortgage company do it is up to all of you. It might just be better to go along with whatever is easiest for now and then transfer ownership when the mortgage company is no longer involved in the closing.
In the case of foreclosure, that will depend on who is on the loan, not just on the deed. If you're on the loan as a co-signor, then you'll be responsible for making sure the payments are made on time. If they aren't, you will also be named in the foreclosure, whether you're on the deed or not.
Hope that helps.
ForeclosureFish
http://www.foreclosurefish.com/...
Make sure your deed says each party has 1/3 interest and ensure you are covered, since you are sinking the first 1/3 in to the house, should something happen in one year, you will only get 1/3 of the proceeds (for example if you're foreclosed on). You can go on the mortgage documents and deed and be part of the mortgage application. It doesn't matter that you don't have a job, your credit will be included in your debt ratio, so if you have a ton of open credit maybe that's why they don't want you on the application. If you go on deed after the closing then you have rights to the house, but are not an obligor to the note. The mortgage company doesn't put you on deed after the closing, you would need to draw up a quit claim deed and have it recorded (you should get an attorney familiar with real estate to take care of it)
If your parents pass on, it dpeends how title is held on how it will be distributed. If your vested on deed with rights of survivorship, then you get the house (and any debt that is attached to it). If however, you are vested as tenants in common, their portion of the home (and the debt) will be distributed according to their wishes in their will, if they have no will, their portion will be distributed amongst all immediate heirs.
Be careful that you don't lose your 1/3 down payment, get an attorney before you move forward. An attorney who is protecting your interest, not one for you and your parents. My concern, say the house is worth 300K and you are sinking 100K into it from day one, in 2 years, something happens and the bank forecloses, you still owe 195K, which in theory is your parents debt, the house sells for 300K, will you get your initial investment back, or will your parents be looking to split the proceeds from the sale (assuming there are any) three ways?
Foreclosure has nothing to do with who owns the house. If payments are not made the lender forecloses and the house is sold at the court house steps to the high bidder. If no one bids, the lender becomes the owner of the house.
A quit claim deed is the way to add you to the deed on the house. If you take title as joint tenants you will totally own the house at the deaths of your parents WITHOUT probate.
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