Can a Family Member Add You to an FHA Mortgage by a Quitclaim Deed?

by Fraser Sherman, Demand Media Google

    A quitclaim deed can give you title to real estate fairly simply -- but it can't put your name on a mortgage. If your mortgage is insured by the Federal Housing Administration, that doesn't change the quitclaim's powers. Your relative can relinquish his claim to a property with a quitclaim deed, but it will take more work to put you on the mortgage.

    Quitclaim Deed

    A quitclaim deed does what it sounds like: the grantor -- the person signing it -- quits any claim to the property he ever had. Unlike warranty deeds, there's no guarantee the title is good. If the grantor bought the house from someone who didn't have the right to sell, a warranty deed lets you sue the grantor, but a quitclaim deed doesn't. It's risky to buy a house with a quitclaim deed, but it's quite common for family members to use them to transfer title.

    The Mortgage

    Even after the grantor gives up title with the quitclaim deed, she's still obligated to pay any mortgage that she owes. This can become a problem, particularly in divorce cases, if there's no follow-through. An ex-spouse who gives up title with a quitclaim may discover her spouse never refinanced the mortgage to get her name off it -- so she's still legally obligated to make payments. Likewise, you can't become the mortgage co-borrower without going back to the lender to refinance.

    Adding Your Name

    With an FHA-backed mortgage, it's often easier to add a name to the mortgage than with a conventional loan. FHA offers "streamline" refis, which speed up the process if your relative already has an FHA mortgage. Your grantor can qualify if the refi rate is lower than what he's paying now. Streamline refinancing requires a lot less paperwork and time to complete. You may not even need to undergo a credit check before the FHA approves you.

    Considerations

    A quitclaim deed can't transfer title if the grantor screws it up. The law in every state says a valid deed needs the names of the grantor and grantee -- in this case, you're the grantee -- the date of the title transfer and the legal description of the property. The grantor has to sign the deed in the presence of a notary. Some states also require that you sign, and that the signatures be witnessed. If the grantor ignores the rules, you could end up without the title.

    About the Author

    A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.