I am considering the purchase of a home in the nex few months because we will otherwise remain homeless. I am in the middle of a bk. My wife's credit is poor and she does not earn much. My inlaws have great credit but they have a high debt to income ratio (they own a few properties), my parents have no income other than social security and a pension, but no credit to speak of. They buy everything cash. My parents want to help because they have equity in their home and I am the life estate trustee for their property. Given the above scenario, is there a way that my parents can use their equity for the purchase of another home where we will pay the mortgage as renters???
If your parents have a life estate, they have no marketable equity. When they pass on, the property goes to the estate in remainder (I assume that is you), as such there is no rral security for the lender - if they had to foreclose they would not wind up with a fees simple ownership. If you are misstating your role here - maybe there is no life estate here but you are a successor trustee to your parents living trust - the parents could possibly have enough equity to obtain a reverse mortgage and gift those proceeds to you. Whatever your parents decide to do, they should first talk to thier own lawyer. You don't want any of your relatives accsuing you of exerting undue influence.
Richard A. Rodgers, Esq.
200 N. Westlake Blvd. Ste 201
Westlake Village, CA 91362
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Your best bet is to avoid the traditional mortgage process and buy a property where the seller carries back financing or where you can assume a mortgage application (perhaps even without telling the lender - there is a small risk of loan acceleration here) that the current occupants/owners cannot afford to pay - you walk in and make the payments saving the credit of the "Sellers". Both of these strategies have nuances which should be discussed with a profession, but given the amount of distressed property should be possible.
Another possibility may be to terminate the life estate and use a reverse mortgage.
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