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.

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.

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.

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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

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Laws of Tennessee Power of Attorney

A power of attorney allows an agent to make medical or financial decisions on behalf of a principal, subject to the terms of a written power of attorney authorization form. Power of attorney is governed by state law, and the laws of each state are slightly different. In Tennessee, power of attorney is governed by Section 34 of the Tennessee Code.

How to Appoint a Power of Attorney

A power of attorney allows one person to act on behalf of another person in various matters, including health or finances. You may give another person, known as your agent or attorney-in-fact, power of attorney as long as you're mentally competent. You must draft a power of attorney document that meets the legal requirements in your state in order to give your agent authority.

Can You Change a Deed Anytime You Want to if You Have Power of Attorney?

When you sell real property, the sale is recorded by changing the deed to the property. For various reasons, a person may want to grant the power to sell the property to an agent under a power of attorney. State laws vary about the requirements for changing a deed and creating a valid power of attorney, but all states allow a power of attorney to be used to transfer real estate.

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