Taking over mom's mortgage. A few questions

[Jennif102]

What is the name of your state (only U.S. law)? New Jersey


My mom owns a home in NJ and I am refinancing it. I am doing a cash out refinancing to use the cash to pay off my student debt. I am definitely doing this so please do not advise me against it. Already decided. But I do have several questions listed below:

1. I am going to assume and pay the entire mortgage so I want to deduct the interest on my taxes. Do I need to be added to the deed, the mortage, or both? The mortgage service is saying I just need to be on the loan.

2. My irresponsible adult brother lives with mom. Her Will says we get everything 50/50. What's the easiest way to change this so that upon her death we get 50/50 only AFTER deducting the mortgage total I assumed today (the only reason why she has the mortage was to pay for a lawyer when my brother had serious legal trouble). Can this be a simple addendum clause to the will?

3. What about 5 yr medicaid lookback? Should I get the house out of mom's name now while she's still healthy? I'm not sure who that works but I just read about a ladybird deed and was wondering if this exists in NJ?

4. I was wondering what I miss out on when I eventually go to buy my own home if I get my name on the deed of this home- in terms of first time homebuyer credits? I'm thinking I make too much money already that such credits won't apply to me (>$100K a year.) Can someone let me know if this is correct?

Of course I will consult a legal advisor in NJ but would love some free advice to get me started. Thanks!What is the name of your state (only U.S. law)?

[FlyingRon]

Originally Posted by Jennif102

My mom owns a home in NJ and I am refinancing it. I am doing a cash out refinancing to use the cash to pay off my student debt. I am definitely doing this so please do not advise me against it. What does your mother say? Why would she want to let you encumber her house. If you fall on hard times, she'll be foreclosed upon and evicted.

OK, bad idea for you, probably bad idea for your mother.

1. I am going to assume and pay the entire mortgage so I want to deduct the interest on my taxes. Do I need to be added to the deed, the mortage, or both? The mortgage service is saying I just need to be on the loan.

Do you live in this house? If it's not a qualified home you can't deduct no matter what is on the deed and mortgage.

2. My irresponsible adult brother lives with mom. Her Will says we get everything 50/50. What's the easiest way to change this so that upon her death we get 50/50 only AFTER deducting the mortgage total I assumed today (the only reason why she has the mortage was to pay for a lawyer when my brother had serious legal trouble). Can this be a simple addendum clause to the will?

You do know that you may get screwed anyhow? Just because the property is willed to you doesn't mean it goes to you. It may have to be sold to settle other debts in the estate.

3. What about 5 yr medicaid lookback? Should I get the house out of mom's name now while she's still healthy? I'm not sure who that works but I just read about a ladybird deed and was wondering if this exists in NJ?

You're banking on the fact she won't need medicaid for 5 years. Further, you do know you can end up way upside down taxwise here. Presumably she has owned this house for a long time and you will pick up her low basis. If you sell the house, you could end up with not enough cash left to payoff the mortgage and your tax liability.

4. I was wondering what I miss out on when I eventually go to buy my own home if I get my name on the deed of this home- in terms of first time homebuyer credits? I'm thinking I make too much money already that such credits won't apply to me (>$100K a year.) Can someone let me know if this is correct?

You're pushing the limit but not over it right now, but the credits most likely won't go on forever.

[rhinocl]

my mom owns a home in nj and i am refinancing it. I am doing a cash out refinancing to use the cash to pay off my student debt. I am definitely doing this so please do not advise me against it. Already decided. But i do have several questions listed below:

1. I am going to assume and pay the entire mortgage so i want to deduct the interest on my taxes. Do i need to be added to the deed, the mortage, or both? The mortgage service is saying i just need to be on the loan.

Needs be only mortgage, should be deed too

2. My irresponsible adult brother lives with mom. Her will says we get everything 50/50. What's the easiest way to change this so that upon her death we get 50/50 only after deducting the mortgage total i assumed today (the only reason why she has the mortage was to pay for a lawyer when my brother had serious legal trouble). Can this be a simple addendum clause to the will?

If he gets her half minus adjustment for mortgage but you owe on mortgage you have an unfavorable situation. Either he should get none of the house or you should have sole use of the house and 10 years to sell it and pay him after she dies.

3. What about 5 yr medicaid lookback? Should i get the house out of mom's name now while she's still healthy? I'm not sure who that works but i just read about a ladybird deed and was wondering if this exists in nj?

Get the whole house into your name soon. That should take it out of the estate and solve any problems with brother. Perhaps you need to buy her equity on time with a 2nd mortgage after you refinance. He could then get his share of those payments after she dies.

4. I was wondering what i miss out on when i eventually go to buy my own home if i get my name on the deed of this home- in terms of first time homebuyer credits? I'm thinking i make too much money already that such credits won't apply to me (>$100k a year.) can someone let me know if this is correct?

You can't be on deed and live in that home or you lose the tax credits. You can't get credits from buying your mother's house. You'd have to buy another house first to get credits-but that might screw up refi.for details on the tax credit go to the irs site and read carefully.

[justalayman]

1. I am going to assume and pay the entire mortgage so I want to deduct the interest on my taxes. Do I need to be added to the deed, the mortage, or both? The mortgage service is saying I just need to be on the loan.

I am not aware of a mortgage lender that will write a mortgage loan unless you are on the title. Mom will also have to sign the mortgage lien, whatever that happens to be in your state.

2. My irresponsible adult brother lives with mom. Her Will says we get everything 50/50. What's the easiest way to change this so that upon her death we get 50/50 only AFTER deducting the mortgage total I assumed today (the only reason why she has the mortage was to pay for a lawyer when my brother had serious legal trouble). Can this be a simple addendum clause to the will?

If you own this joint with rights of survivorship, the home will become yours 100% at moms death (obviously 100%- mortgage loan debt). Brother will have no claim to it and moms estate will have no claim to it as an asset either. Obviously mortgage loan will continue as was.

3. What about 5 yr medicaid lookback? Should I get the house out of mom's name now while she's still healthy? I'm not sure who that works but I just read about a ladybird deed and was wondering if this exists in NJ?

if you are concerned about this, then yes.

4. I was wondering what I miss out on when I eventually go to buy my own home if I get my name on the deed of this home- in terms of first time homebuyer credits? I'm thinking I make too much money already that such credits won't apply to me (>$100K a year.) Can someone let me know if this is correct?

so you want your cake and eat it too.

If you purchase this home from mom, you will be a first time buyer. After that, you aren't. Pretty simple concept.