[Deja Vu Donna]

Hi there... my son is buying his first home... he is a bachelor, just out of college. My husband and I are giving him $40,000 for a downpayment on this home. He is getting the loan in his name. All we want is to have our names on the deed; i.e. Tommy Jones, Harry Jones, Mary Jones so that if he sells it we will get our money back and he can have the remainder. He wants to establish credit and live in this house for about 10 years while he is working on a ph.d. degree and then possibly sell it. What are the ramifications of this putting our name on the deed... do we have to do anything special in order to have our names put on the deed? And, is it true that he cannot sell it without our agreement or get a second mortgage, etc? Please give me any thoughts and problems you see might come our way if we do this. Thanks! Xoxo

[ScottGem]

This will probably not work. The lender is not likely to give him a primary mortgage in his name alone, if your names are on the deed. Besides which, you are taking a disproportionate share. Having all three of you on the deed means each has a 1/3 share. So, unless the cost of the house is $60K, your share is too much.

What you SHOULD do, is get your son to sign a promissory note, pledging the property as collateral for the loan. At the closing, have this note entered as a secondary lien behind the primary mortgage. You are still taking a risk that the property will sell for more that he paid down the road. But, this way, he can get a primary mortgage in his name.

[Deja Vu Donna]

Hi! Thanks so much for your quick answer. We have to sign a gift letter stating that this is not an amount that is being loaned to him. All we want to do is to recover t he $40,000 when the home is sold. He can have the rest. Is there such a thing as a survivorship deed? Could a promissory note be signed and notorized stating that upon sale of the home, $40,000 would be given to both of us (my husband and I or one of us )if the other is deceased? We want to get him started and he will be making all t he payments. He has already been approved for the loan by himself... it is the amount of downpayment we are helping him with so he can have a monthly payment that won't choke him to death. Whatcha' think? Xoxo

[ScottGem]

You can't have it both ways. Either it's a gift or a loan. It can't be both. If you sign a letter stating it's a gift, then it does not have to be paid back. If you want it back, then you have to get a note indicating the terms of when and how its paid back.

I'm sure he was approved for the loan based on the deed being in his name alone. If you try to put your names on the deed,the lender is likely to pull the loan approval. Your best bet is the promissory note.

[Deja Vu Donna]

Scott, why can't we just be on the deed, as a survivorship type situation..? If we are on the deed and the house is sold, don't we have to approve the sale also? In that case, we can pull our $40,000 out and he can have the remainder of t he equity. We don't have to tell the mortgage company/bank that we are going to take back the $40,000... we just want him to know that we need to get the moola back... we aren't rich and are borrowing to give to him so he can have a good start.

[Fr_Chuck]

You can ask the lender if you can be added. But that will be up to the lender. But as doing this, again, the mortgage company is not stupid either.

Personally I think he should wait till he can afford his own property, esp if you can't afford to lose this, what if the value of the property keeps going down ? Nieghborhood changes and the values go down.

Also unless you are listed on the loan, you will not know if he is in foreclosure and would just lose it either.

But Scott is correct, you can not have it both ways, why would you not do just a 2nd mortgage on the home to give you some protection.

[Deja Vu Donna]

Thanks, Fr. Chuck... I will have to think about this... just trying to help our son... xoxo

[ScottGem]

There is no such thing as just a survivirship ownership. You are either a part owner or you aren't. If you have an ownership interest then the lender is going to want you on the loan.

If yoyu want the money back the best way is to get him to sign a note, pledging the property as collateral.