Family Trust And Mortgage Refinance
(South Gate, CA, USA)
Ask Kate: Family Trust And Mortgage Refinance Kate, My property is in a family trust that my grandfather left me when he died in 2005. I back in 2005 took out an equity line of credit to upgrade the property, and then in 2006 locked in the rate 30 year fixed.
But now we would like to consolidate bills but because my name is not on the vesting I am having trouble finding a lender who will give us a loan without changing the house over to our name.
For tax reasons I am not interested in changing vesting since our property taxes are $800.00 a year v.s. current market value. Although we really need debt consolidation I'm not so sure that 40k-50k is worth changing the vesting?
In 2006, houses on both sides of me sold, to the right for 525k and to the left 485k.
Kate Answers: Family Trust And Mortgage Refinance
Hi MF, You have great questions. The matter of title is of interest to many readers.
My first thought upon reading your letter is to wonder which lender funded the equity line of credit in 2005. Did the same lender also allow you to lock in the fixed rate mortgage in 2006? Perhaps returning to that lender might, for some reason, allow you to refinance again without being on title.
But I also believe there may be issues larger than whether or not you can refinance without being added to title. You actually brought up the concern yourself. There may be tax consequences if you change title - property taxes as well as income or sales/transfer tax.
I would recommend consulting a certified public accountant, certified financial planner and/or a real estate attorney. Also, is the attorney who created the trust one that you might confer with?
You make a good point that consolidating $50,000 might not be worth the cost of a refinance plus the cost of title work and any tax consequences.
I wish I could be more specific however I think as I mentioned above, I need to defer to a CPA, CFP, or attorney.
As you work through this and have any questions related to the mortgage, I hope that you would write back.
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