Quit Deed, Are there Taxes?

What is the name of your state? What is the name of your state? Pennsylvania

My Partner and I began searching for a house about 2 years ago, we finally found one we agreed on and began the long process of buying. My credit wasn't good enough to be listed on the loan, so we had the loan set up in his parents and his names. The mortgage broker told us he would have the loan set up so that we could assume the loan in just my partner and I's names after making 12 consecutive payments. We have been paying on the house for 14 months now, and decided to call the mortgage company ( Option One ) and begin the process of assuming the loan. To our surprise the mortgage company told us they do not offer assumable loans. I dug out the paperwork from when we purchased the house, and found the Federal Truth in Lending statement from option one. The second page has a box marked that reads: " Assumption: Someone buying your home, may, subject to conditions, be allowed to assume the remainder of the mortgage on the original terms." The company denies any legal responsibility for this document and says we will simply have to refinance the house in our names. I've talked to several mortgage companies, and one of them has told me that we would have to have his parents file a quit claim and have just his and my names put on the title for the house. My main concern is whether or not his parents will have any tax liability in doing this? I don't mean real estate tax, I am concerned about sales taxes or income taxes. Since the house has only been paid on for one year, the principle is nearly the same as when they purchased it, and we will only be refinancing for the amount of the original loan. They also said we would have to wait 6 months after filing the quit claim to re-finance the house. I'm not sure how that works, are they legally allowed to transfer the title of the house from their names to mine and my partner's while the mortgage company still technically owns the majority of the property?

[Ciarraine]

Originally Posted by tobi680

What is the name of your state? What is the name of your state? Pennsylvania

My Partner and I began searching for a house about 2 years ago, we finally found one we agreed on and began the long process of buying. My credit wasn't good enough to be listed on the loan, so we had the loan set up in his parents and his names. The mortgage broker told us he would have the loan set up so that we could assume the loan in just my partner and I's names after making 12 consecutive payments. We have been paying on the house for 14 months now, and decided to call the mortgage company ( Option One ) and begin the process of assuming the loan. To our surprise the mortgage company told us they do not offer assumable loans. I dug out the paperwork from when we purchased the house, and found the Federal Truth in Lending statement from option one. The second page has a box marked that reads: " Assumption: Someone buying your home, may, subject to conditions, be allowed to assume the remainder of the mortgage on the original terms." The company denies any legal responsibility for this document and says we will simply have to refinance the house in our names. I've talked to several mortgage companies, and one of them has told me that we would have to have his parents file a quit claim and have just his and my names put on the title for the house. My main concern is whether or not his parents will have any tax liability in doing this? I don't mean real estate tax, I am concerned about sales taxes or income taxes. Since the house has only been paid on for one year, the principle is nearly the same as when they purchased it, and we will only be refinancing for the amount of the original loan. They also said we would have to wait 6 months after filing the quit claim to re-finance the house. I'm not sure how that works, are they legally allowed to transfer the title of the house from their names to mine and my partner's while the mortgage company still technically owns the majority of the property?

Assumption: Someone buying your home, may, subject to conditions, be allowed to assume the remainder of the mortgage on the original terms...

You're not purchasing this house. You're asking for a novation, not an assumption: a situation in which the lender excuses some of the parties to a loan and (possibly) adds new ones. Not the same thing.

His parents can transfer the title in favour of you, but that could activate the due-on-sale provisions of the mortgage.

Your best bet is a refi. Option One is a subprime lender anyway. Don't you want to try and bring down your rate if you can?