Q: Best way to buy a house with a child
My son was planning on buying a house but was furloughed due to COVID 19 and isn’t able to get financing. My husband and I are going to purchase the house but our son will make all of the payments. We will eventually transfer the house to him. What is the best way to purchase at this time? Jointly with our son? Only in our names? Our goal is to eventually make the transfer as seamless as possible with minimal cost.
A: If you plan to purchase the home and put your name on the mortgage, I would strongly advise you to purchase the home in your own name. It is not a good idea to purchase property and title it in another person's name, as you will be held responsible for the mortgage if the other person quits paying. In this instance, if you want to buy the property, I would buy it in your own name, and then sell it to your son when he is able to obtain conventional financing. At that time you can deed the property over to him at the same time he qualifies for his own mortgage on the property. The only other method I would consider is buying it jointly with your son, where all three of you are on the title, and all three are on the mortgage, just be aware that if he quits paying, you will need to take over paying the mortgage. Then I would advise you selling your interest in the property to your son and deeding over your interest in the home, at some point in the future when your son is able to qualify for the mortgage on his own. You do not want to be listed as a guarantor on a mortgage without an ownership interest in the property secured by the mortgage.
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