Legal Question in Real Estate Law in Illinois
I live in a house owned by my mother. She bought the house for my children and I because I didn't have good enough credit to get a mortgage on my own. The house is titled only in her name. My children and I have lived in the house for five years. We have paid the mortage, the insurance, and for all the taxes, upkeep, etc. My mother has never paid for any expenses related to the house. I put up the $14,000 down payment. (I had the money, just not the credit). Now she would like to get the house out of her name but when I went to the bank to get a mortgage, my credit score was 616 and they said that was still not good enough to get a mortgage in my name. I am worried that if something happens to my mother and she becomes incapacitated and no longer able to make decisions that I could lose the house. She would like to quit claim deed it to me but I'm not sure that transfers title and I worry about the tax implications. Is this a good idea or should I just continue to work on my credit score until I can get the mortgage in my name? At this time I do not have the funds for another down payment. Since I don't own the house, all the equity is legally in her name. HELP!
2 Answers from Attorneys
A quit claim deed will transfer title if it is recorded. It is possible for you to transfer title and keep the mortgage in your mother's name, but it is not advisable.
Hmmmm, it seems to me that you an argument could be made that you have been buying the house on land contract with an initial down payment and montly payments. If you have been paying for five years and paid that much up front, you should already have a pretty good amount of equity in the home to qualify for a loan even with a 616. You also can take some steps to increase your credit score such as lowering your debt to credit ratio by asking for an increase in some credit card limits, arranging for automatic bill payment deductions, etc. I would suspect that you could raise your score within a six months. I suggest that you see an attorney in person.
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