Consequences to co-signing mortgage catch some by surprise

DEAR BOB: My parents divorced in 1995. The judge gave thehouse to my mom, but she had to either sell it or keep it and refinance themortgage. She wanted to keep the house. But she couldn’t refinance because herdebt-to-income ratio was too high. So my mother gave me a quitclaim deed,signing the house over to me, and I helped her refinance with a new mortgage.Now I want to get my name off the title and put my mother back as sole owner,as she desires. If I do that and my mother dies, am I responsible for themortgage payments although I don’t hold title? What do I need to do toquitclaim the house title back to my mom? Do I need to go through a titlecompany? –David P.

DEAR DAVID: If you are now on the title alone, you can signa quitclaim deed to your mother. However, you will still remain liable to makesure the mortgage payments are made even when you don’t hold title to theproperty.

Purchase Bob Bruss reports online.

When your mother dies, the title to the house then goes towhomever she names in her will or revocable living trust.

You don’t need to go through a title company to quitclaimyour title to your mother. The deed must include a legal description of theproperty, usually with its parcel number, and your signature must be notarizedso the deed can then be recorded to transfer title to your mother. For fulldetails, please consult a local real estate attorney.

BE CAREFUL ABOUT HELPING ELDERLY NEIGHBOR

DEAR BOB: Our next-door neighbor, Charlie, is about 65 andretired. He is divorced and lives alone in his house. In 1995, he and hisex-wife bought the house for $220,000. Today, it is worth around $650,000. Theex-wife is asking that he now sell the house to pay off its $187,000 mortgageto get her name off the mortgage so she can receive her half of the profit.Charlie doesn’t want to sell the house and move. He is a wonderful man andneighbor. My wife and I trust him completely and are willing to use our liquidassets to help him stay in his house. We are thinking of buying the house fromhim for cash and then selling the house back to him. Or perhaps we can loan himthe money to pay off the mortgage and buy out his wife’s share, with himgetting a home equity line of credit (HELOC) to pay us back. Your thoughtsplease –Ashley S.

DEAR ASHLEY: If Charlie can qualify to get a HELOC for theamount needed to buy out his ex-wife and pay off the existing mortgage, let himdo it on his own. No sense in you getting involved in a potentially messysituation.

If he can’t qualify for a new mortgage, perhaps you can buythe house and rent it back to Charlie. That would give you the rental propertytax benefits and Charlie (and his ex-wife) can each claim their $250,000principal residence sale tax exemption up to $500,000 total. For more details,you and Charlie should consult your tax advisers.

IS A TAX LIEN CERTIFICATE SEMINAR WORTH $2,495?

DEAR BOB: I recently attended a motivational real estateconference at a fancy hotel with a free lunch and a well-known ex-NFLquarterback as the special guest. The speaker claims investing in tax liencertificates will return a yield of 16 to 36 percent from counties across theU.S. The price for his seminar package is $4,285, but as a “nice guy”he offered it at a special discount price of just $2,495. I smelled a shark soI didn’t jump in the water. But many people bought the seminar. Are tax liencertificates really this lucrative? –Ken Y.

DEAR KEN: Congratulations for not spending the $2,495 forthat tax lien course. Yes, tax lien certificates can be very profitableinvestments. However, you’ve got to know what you’re doing if you want to avoidlosing money.

An excellent book (cost less than $25) you can read on thistopic is “Profit by Investing in Tax Liens” by attorney Larry B.Loftis. It is available in stock or by special order at local bookstores,public libraries and www.Amazon.com.

The new special report, “Probate Property ProfitSecrets Revealed,” by Robert Bruss is now available for $5 from RobertBruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736or instant Internet delivery at www.BobBruss.com.Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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