What is the most cost effective way to get my mother's mortgage in my name so that I can use my high credit scores to refinance the property, which is currently "under water?"
I am taking care of my mother's condo in Florida which is currently "under water." The loan balance is $48,000, the monthly payment is $450 and the interest rate is 7.25%. The estimated value of the property is $25,000. I am currently renting the condo for $400 per month. The condo is in my mother's name, although I make all the payments; all payments are up to date. Because of her own credit situation, and the fact that she has other properties, I don't think she is a candidate for a Home Affordable Refinance Program (HARP).
I want to get the mortgage in my name because I believe I will have more options for refinancing the mortgage with my credit scores. What is the most cost effective way to get this mortgage in my name?
I don't see why you would want to refinance a $48,000 mortgage ona $25,000 property. I don't see why a bank would give you such a mortgage.
From what you are describing, the best financail option is to foreclose and buy another condo.
If I misunderstood let me know. I'll be happy to be creative!
WIthout knowing far more details that you provided I cannot begin to give you solid advice as this is a complicated question that could have estate & tax planning consequences. So without knowing your mother's wishes and other relevant facts, I cannot determine the easiest way to do this. That said, one solution is IF your mother doesn't care about that particular property, she could "gift" it to you using a portion of her annual gift amount and part of her lifetime exclusion so there would be no gift tax. But this would be a gift to you outright and she may need the asset/money later once the note is paid off by you or renters. This is fairly complicated and you should file the appropriate gift tax return (with no taxes due) as an informational return. Once the house is legally in your name, you could refinace the mortgage. BUT the whole problem here is that if the fair market value (FMV) of the house is only $25k, how is the note $48k? Did the property drop that much in value as banks will not let you borrow more that the property is worth when the loan is made? Something doesn't quite make sense or I am missing some facts. Because the problem you will have is that if/once the property is in your name, you will not be able to refiance a $48k note on a property worth $25k. Until the property increases in value, the balance of the note decreases, or a combination thereof, you might be stuck. Again, this is just trying to think outside the box with the limited details I have.
Sorry couldn't be of more help and best of luck, Dan Stewart CFA®