My brother-in-law/sister and myself are trying to work out a property deal in order to keep a piece of property in the family. My brother-in-law’s dad owns two adjoining parcels in the mountains of North Carolina, and he wants to sell them to get rid of debt and because he doesn’t use them. I want to buy one of the parcels, and we’re trying to figure out how to do that.
We’ll call them Parcel A and Parcel B. Parcel A is 0.75 acres and has a 3 bedroom house on it that is in pretty good condition, and is assessed at $120K. My brother-in-law will keep this parcel. Parcel B is 3 acres, has a small 1 bedroom cabin on it and another building that I will eventually turn into a house. Parcel B is assessed at $80K, but I won’t be able to get a mortgage on it in its current state because neither building is currently habitable (the bathroom for the cabin has been torn out). I am going to buy Parcel B for $50K. I know it will appraise for more than $50K, but like I said, a mortgage will not be possible until improvements are made. I don’t want to sink money into fixing up the property until I have some kind of right of ownership in case the deal fell apart for some reason.
My brother-in-law’s dad took out a $50K HELOC on both properties, so the lien is on both. I don’t know why he did it that way. So we’d like to figure out some way to transfer ownership of Parcel B and the HELOC debt to me without doing a mortgage. I should say we trust my brother-in-law and his dad absolutely and are not worried about them screwing us.
Here is what we are considering. And yes, we will engage a lawyer in this. We have informally talked to a friend who is a lawyer.
Option 1 – My wife and I pay my brother-in-law’s dad $10K cash (which we were going to use as a mortgage downpayment) and he simply adds us to the deed for Parcel B with him so we have some legal ownership of the property and feel comfortable investing in improvements. We make the HELOC payments for him while we make improvements, and then in a year or so when it’s fixed up we somehow refinance the HELOC into our names and take him off the deed. If we are on the deed with him as co-owners, would we be able to refinance the HELOC into our names and take his off? We have the credit and income.
Option 2 – My brother-in-law’s Parcel A is assessed at $120K and is more than enough to secure the $50K HELOC balance. We convince PNC Bank to release Parcel B and put the whole lien on Parcel A. We then transfer Parcel B’s clean debt-free title to me. I make improvements, then take out a HELOC or mortgage to pay off the existing HELOC on the other parcel.
What do the experts here think of these options? Are they doable? Is it possible to essentially “refinance” my brother-in-law’s dad’s HELOC into my name and him just transfer the deed to me? Is there a better solution we haven’t thought about?
We’ll call them Parcel A and Parcel B. Parcel A is 0.75 acres and has a 3 bedroom house on it that is in pretty good condition, and is assessed at $120K. My brother-in-law will keep this parcel. Parcel B is 3 acres, has a small 1 bedroom cabin on it and another building that I will eventually turn into a house. Parcel B is assessed at $80K, but I won’t be able to get a mortgage on it in its current state because neither building is currently habitable (the bathroom for the cabin has been torn out). I am going to buy Parcel B for $50K. I know it will appraise for more than $50K, but like I said, a mortgage will not be possible until improvements are made. I don’t want to sink money into fixing up the property until I have some kind of right of ownership in case the deal fell apart for some reason.
My brother-in-law’s dad took out a $50K HELOC on both properties, so the lien is on both. I don’t know why he did it that way. So we’d like to figure out some way to transfer ownership of Parcel B and the HELOC debt to me without doing a mortgage. I should say we trust my brother-in-law and his dad absolutely and are not worried about them screwing us.
Here is what we are considering. And yes, we will engage a lawyer in this. We have informally talked to a friend who is a lawyer.
Option 1 – My wife and I pay my brother-in-law’s dad $10K cash (which we were going to use as a mortgage downpayment) and he simply adds us to the deed for Parcel B with him so we have some legal ownership of the property and feel comfortable investing in improvements. We make the HELOC payments for him while we make improvements, and then in a year or so when it’s fixed up we somehow refinance the HELOC into our names and take him off the deed. If we are on the deed with him as co-owners, would we be able to refinance the HELOC into our names and take his off? We have the credit and income.
Option 2 – My brother-in-law’s Parcel A is assessed at $120K and is more than enough to secure the $50K HELOC balance. We convince PNC Bank to release Parcel B and put the whole lien on Parcel A. We then transfer Parcel B’s clean debt-free title to me. I make improvements, then take out a HELOC or mortgage to pay off the existing HELOC on the other parcel.
What do the experts here think of these options? Are they doable? Is it possible to essentially “refinance” my brother-in-law’s dad’s HELOC into my name and him just transfer the deed to me? Is there a better solution we haven’t thought about?
Closings and Escrow: Transfer of Property with HELOC on It
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