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Buying or Selling a Home/Buying a house with our daughtwr

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Expert: John Hendricks - 9/26/2007


Question
We would like to help our daughter with a down payment for a house. We plan on lending her 20,000. We would expect the money back if she sold the house. She can have any appreciation in the value of the house and the tax advantages. How do we protect our 20,000 and make this a successful venture. She is single at this point. Do we need to have our name on the title? Do you have any tips. Also she lives in a differnt state than us. Thanks

Answer
Dear Rhonda;
Thank you for your question. This question is commonly asked by a number of parents who want to help their kids purchase their first home.

Depending on your daughter’s credit and ability to obtain financing for the home, this will be the determining factor if you would need to be a co-borrower and be included in the title. If she does need assistance in financing, you would be on the loan for the duration, and initially on title as well. Even if you would want to release your name from the title on the property in the future, you would still be on the loan until a refinance would occur or selling the property. If this was the case, you and your daughter would have to make an agreement as to the division of tax benefits, who would be making the mortgage payment and property taxes plus repairs in the future. You would also need to address the division of profits from the sale of the home when she decides to sell or refinance to pay you back. Those divisions could be any amounts agreed upon by both parties.

Now if you were to simply loan her the money with no financial assistance in obtaining a loan, no you do not need to be on title, nor would you want to be at least while she is in the process of buying the home. The lender would not allow you to be on title unless you were on the loan. Only after the close of escrow, if you feel it is necessary to protect financial interest in her property, you can have the title company who was used in this transaction prepare a second deed of trust with the terms and conditions of the loan included for clear understanding. That document would need to be notarized and recorded to be legal. When your daughter decides to sell or refinance, that second deed of trust would need to be paid in full prior to the future transaction being completed. The second deed of trust does not mean that you would be on title; it simply means that you have a secured interest in the property.

Being a California Realtor, I am not familiar with other states laws and regulations. Since I do not know what state your daughter is located I would highly advise contacting a real estate attorney for further details regarding verification of my recommendations, and what else you can do to secure your financial interest in the property. The attorney can provide you with the written documentation needed if you need to be the co-borrower in the purchase as well.

A seasoned Realtor can offer a great deal of help as well and If your daughter needs the assistance of a quality Realtor in the state she resides in, don't hesitate to e-mail me at JohnHendricks@Marin1.com
I work with some of the best Realtors in the country and would be glad to refer her so she and you make the correct decisions in one of the most important investments in her life. Thank you very much for your question and I hope it was helpful to your family. Good Luck!

Warmest Regards;
John Hendricks  

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John Hendricks

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As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...

Experience

John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors. John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.

Organizations
California Association of Realtors National Association of Realtors

Education/Credentials
Upon Request...

Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member" Chairman's Circle for 10 consecutive years

Past/Present Clients
Joe Louis & Sharon Sigurdson We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers. We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market. Will Finke "Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met." Bruce & Nancy Rosentreter "I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely." Joy Schuelke "Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property." Lynn McCarthy "I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him." Lea Lieurance-Turk "Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
http://www.LundmarkHendricksFineHomes.com

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