Quit Claim or Full Sales Process...which to choose

MarshDenny

New Member
Jurisdiction
Florida
I own a home with my ex-wife. We are both on the title, and we are both on the mortgage. The house is a rental property, but has negative equity. I would like to have full ownership and responsibility. The bank tells me I cannot assume the loan because it is not my residence. I also cannot pursue traditional refinance because the house has negative equity. However, I have located a partner who will loan me the cash to satisfy the full balance of the mortgage.

My question is, what are the positives and negatives between, Option A: Ex-wife quit claims herself off the deed, and then I pay off the bank? Or Option B: Go to a title company and process something like a sale with a full transfer where I am the buyer, and her and I are the seller.

I realize Option B is more expensive, so I would really like to know if Option A is simply a bad idea. And...is there an Option C I should be considering?
 
Before you create a SCENARIO C, or even SCENARIO D, you might want to rethink what it is you wish to accomplish.

Okay, think about your investor. Why in the name of sunshine would anyone want to flush good money after bad? Do you want to own the rental home for sentimental reasons? It certainly makes no financial sense.

You should discuss your goals with a "certified financial planner", a CPA, or a good real estate attorney. For good measure, you might even want to talk to a bankruptcy attorney about a chapter 7.

A mortgage is simply slick banker talk for debt.
Mortgages were a better idea in the 19th century through the middle of the 20th century.

In all honesty, no debt is good debt.
All debt, even a mortgage is to be avoided for the vast majority of Americans.

Please don't take this negatively, both ideas don't make sense.
Why?
Both ideas create more debt for you.

I'm sure your potential investor and you can think of a hundred ways to turn a profit with the $200K, $400K, or whatever amount you're thinking about paying that note off with.

The rental property, as are 95% of homes, is nothing but a debt mill.

I say reevaluate EVERYTHING.
I'm sure you have other great ideas.
 
The bank tells me I cannot assume the loan because it is not my residence.

Unless your loan is a few decades old it likely wouldn't be assumable even if it was your primary residence. You can read your loan contract to verify what the lender is telling you.

Either way, it's unlikely that a lender would release one borrower from a loan when it has two on the hook.

I have located a partner who will loan me the cash to satisfy the full balance of the mortgage.

Good.

Option A: Ex-wife quit claims herself off the deed, and then I pay off the bank?

A general warranty deed is better than a quitclaim deed but you can do either, and do them with or without a title company.

Have you talked to your ex about that? If she has half a brain she'd be wise to have the money deposited into escrow with a title company before signing anything. Fees for just that shouldn't be more than a few hundred.

And if your partner has half a brain he/she would be wise to have the loan secured by the property.

I agree that debt is bad but I don't have an issue with having a loan on rental property as the rental income can make the payments and you get a tax deduction for the interest you pay.
 
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