What you need to know to refinance a home if the home is in a trust

What you need to know to refinance a home if the home is in a trust

With mortgage rates still around historic lows, I have had a few clients this past year where banks have given them trouble when trying to refinance their mortgage on property in a trust. The situation usually goes like this: the client’s home is in a revocable trust for estate planning purposes and they want to refinance their existing mortgage. The bank says they will not refinance the mortgage unless the house comes out of the trust. So, what should they do? The easiest and cheapest thing that I would do for my client is draft a quit claim deed transferring the client’s property out of the trust back into their name individually. The client can take that deed back to the bank and continue the refinance process. The bank will record the deed as part of the refinance transaction. Once all of that has transpired and the new mortgage recorded, I can draft another quit claim deed transferring the property back into the trust. Now, this might seem like a headache, but for the small cost of the deeds and recording fees vs. the benefits of a lower interest rate and the long term estate planning, it makes sense. Too complete both deeds, it would only cost a couple of hundred dollars. For that price, you would receive the benefit of the lower interest rate (after you refinance) and you will still get the benefits of having your real estate owned by your trust (once I complete the second deed). If you are thinking about refinancing and your home is owned by your trust, contact me for help....
In real estate, what is a owner financed sale a/k/a “a contract for deed”?

In real estate, what is a owner financed sale a/k/a “a contract for deed”?

There are different ways to finance the purchase of a piece of property, i.e. a home. Recently, I have been getting more questions and handling more deals for owner financed sales, a/k/a contract for deed transactions. Simply put, a contract for deed is when the seller of the property will act like the bank and finance the deal for the buyer. Based on the contract terms, the buyer is usually allowed to move into the house immediately and make payments directly to the seller to be applied toward the purchase price. The loan term is typically 30 years but the buyer only pays the seller for 3 to 5 years and at the end of that term must pay off the balance of the purchase price with a traditional mortgage (the balloon payment). This is a great strategy if the buyer’s credit is not quite good enough to qualify for a mortgage but should be in a few years. Helpful Tips If you are in the process of entering a contract for deed transaction (buyer or seller), here are some important items to think about before signing on the dotted line: The purchaser does not own the property until they pay off the full amount per the contract. The contract must specify which party will pay real estate taxes during the contract period (as well as who gets to claim the property for tax purposes). The parties must decide who is responsible for maintaining homeowner’s insurance. The last thing you would want is for your homeowner’s insurance to lapse. Without a bank paying the insurance out of an escrow...