While most homeowners take out a mortgage to purchase a property, a mortgage can become a burden down the line if the borrower’s employment or health situation changes. Taking over the mortgage of another person, like your mother, can be tricky, but there are several ways you may be able help.
If your mother is unable to make her mortgage payment, perhaps the easiest way to help out would be to simply make the payments for her by writing a check and mailing it with her monthly mortgage coupon. Her mortgage lender is concerned primarily about whether the loan is being paid regularly, not so much in who is making the payment. This way, your mother will retain ownership of the home while you’re making the payments. That said, simply making the mortgage payment will not give you legal rights to the property, or enable you to use it as a tax deduction.
Assuming the Mortgage
It may be possible to take over your mother’s mortgage payments by assuming the mortgage. This requires the loan to be assumable, and you will likely need to meet the lender’s requirements before assuming the loan. While this method will enable you to make the payments as well as reap any tax benefits associated with the mortgage, it requires an actual transfer of ownership. If you legally assume the mortgage, you will be the legal owner, not your mother.
Due on Sale Clause
If assuming the mortgage is a good option for you, you’ll also need to make sure the loan does not include a “Due on Sale” clause. Many loans include this provision, which essentially requires the entire loan balance to be paid upon transfer of the property. There are a few exceptions to this clause -- for instance, when a property is transferred from a parent to a child. Unfortunately, the inverse is not included as an exception, so you would likely be on the hook for the total loan amount in order to transfer the property to your name.
Co-sign on the Loan
It may be possible to take over your mother’s mortgage payments by refinancing the home and co-signing on the mortgage. Co-signing is different than co-borrowing, which is when more than one person purchases the property and each is awarded ownership of that property. If you co-sign on your mother’s loan, you will have legal responsibility to pay the mortgage, but will not actually have ownership of the property. The upside to this situation is that, even if you’re not on the title of the home, you can still deduct the mortgage interest you pay from your taxes.
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