Can a Power of Attorney Get a Home Loan?

By Heather Frances J.D.

If you aren’t able to personally accomplish a task, you may grant someone else – called your agent – the power to do it for you. This permission can include things like accessing your bank accounts, selling a vehicle, purchasing property or getting a home loan. In fact, your power of attorney can grant your agent authority to conduct nearly any type of real estate transaction you could conduct.

If you aren’t able to personally accomplish a task, you may grant someone else – called your agent – the power to do it for you. This permission can include things like accessing your bank accounts, selling a vehicle, purchasing property or getting a home loan. In fact, your power of attorney can grant your agent authority to conduct nearly any type of real estate transaction you could conduct.

Powers of Attorney

The person who grants power to an agent is called the principal, and the principal may use either a general power of attorney or special power of attorney to give his agent powers. A general power of attorney gives the agent power to accomplish anything the principal could do, whereas a special power of attorney gives the agent narrower powers, such as the power to accomplish a specific real estate transaction. Either power of attorney can be durable – effective even if the principal is incapacitated – or non-durable. Non-durable powers of attorney give the agent authority as long as the principal is not incapacitated but terminate after incapacity.

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Authority

When you give your agent authority to obtain a mortgage or home loan, you will typically give him power to do whatever is necessary to carry out that authority. Your agent may need to negotiate terms for the loan, sign loan documents, or take care of other loan preparations. When your agent obtains a mortgage or loan on your behalf, the agent is not personally liable for the debt, but you are.

Reverse Mortgages

Depending on its wording, a power of attorney can be used to obtain a reverse mortgage. Reverse mortgages allow a homeowner to receive payments from a lender based on the homeowner’s equity in the property. Reverse mortgages are primarily obtained by elderly persons, and a power of attorney allows someone else to sign the documents for the elderly principal. When a principal is incapacitated, the agent may seek to obtain a reverse mortgage to raise money to provide home care or pay for other care expenses.

Competency

A power of attorney must be signed by a principal who is competent when the document is executed, even if he later becomes incapacitated. Since many of the elderly are especially vulnerable to influence and pressure, reverse mortgage lenders may require proof of competency such as a letter from the principal’s doctor stating that the principal was competent at the time the power of attorney was executed. This ensures the agent’s authority is legitimate and that the principal knew what he was doing when he gave the agent this authority.

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Can You Sell a Home With a Power of Attorney?

References

Related articles

Can a Power of Attorney Give Away a Life Estate?

A power of attorney is a written document wherein a principal grants an agent the power to take action on the principal’s behalf. Powers of attorney are often granted because the principal wants to take a specific action but cannot do it personally for some reason. What an agent can and cannot do is defined in the power of attorney document. A power of attorney can grant an agent the ability to give away a life estate specifically or the right to distribute a principal’s property subject to whatever terms the agent sees fit. However, the power of attorney may limit the circumstances in which an agent can use his power.

Durable Power of Attorney for Kentucky

A durable power of attorney is a power of attorney that becomes or remains valid when the principal goes unconscious, becomes mentally incompetent or loses the ability to communicate. It is normally used when the principal is a seriously ill patient, to allow the agent to make medical or financial decisions on behalf of the principal.

Selling Property & Limited Power of Attorney

Generally, a power of attorney document gives authority to another person, known as your agent or attorney-in-fact, to conduct transactions or make decisions on your behalf. This type of document may be helpful if, for example, you cannot attend a real estate closing. You can draft a power of attorney giving a wide range of powers to your agent, or a more limited power of attorney, giving your agent specific powers for only certain transactions. Either type of POA can give your agent power to sell property on your behalf.

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