When you made an offer on a home you were buying, you thought you were getting...

When you made an offer on a home you were buying, you thought you were getting a General Warranty deed. It turns out that the owner can only give you a Quitclaim deed. How might this impact the market value of the property and your ability to get mortgage financing?

Expert Solution

General Warranty Deed is a type of deed which provides great conveyance and protection to the grantee. It includes warranty which the seller conveys along with the title. This General warranty deed mostly covers the warranty of the title of goods.

Quitclaim Deed is a type of deed which has no warrant. It conveys the interest that the grantor had in the property. When the grantor does not want to assume further liability, this quitclaim deed is used. This deed is used for transferring property between family members, for defective and unclear title of property.

Mortgage is a debt instrument which is safeguarded by the collateral of specific real estate property where the borrower has to pay back with a certain set of payments.

Impact of Quitclaim Deed on market value of property and getting Mortgage Financing:

The Quitclaim Deeds shows certain risk to the grantee, as it is used between family members and where there is no money exchange. Hence, quitclaim deeds does not affect the mortgage finance of the buyer.
If the property has outstanding mortgage, it is difficult for grantor to pay off mortgage.
Suppose the grantor has a mortgage, he can use quitclaim deed. He is liable for the mortgage even after the ownership was transferred. Hence, quitclaim deed transfers title of property but not mortgage value of the property.
Even if the grantor has a belief that the grantee will make mortgage payments in quitclaim deed, the grantor has no help if the grantee stops making payment or sell the property to another person.
As seen above, the quitclaim deed is used when no money is exchanged between two parties. So, the marktet value of the property is not affected by quitclaim deed.

jeff jeffy answered 1 year ago

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