Often, when rates dip in response to “World Crises” (Japan, Libya, etc.), the reduction is short-lived. So we are recommending locking rates right now.
We have numerous parents looking to buy homes with or on behalf of their children (or other relatives).
There are three options for a well-qualified parent:
(1) buy the property as an investment property with 20% down;
(2) buy the property as a co-signer with FHA financing with 3.5% down; or
(3) buy the property as a co-signer with conventional financing with 20% down.
With Option #1, the child’s qualifications are irrelevant, but the rate will be about 1/2 percent higher (for “investment property” rates)
With Option #2, the child or “occupant” must have a credit score of at least 620, and only enough income to augment the parents’ income if the parents do not have enough to qualify by themselves.
With Option #3, the child or “occupant” must have a credit score of at least 680, and only enough income to augment the parents’ income if the parents do not have enough to qualify by themselves.
We always recommend “Co-Signing” whenever possible b/c the rates are so much lower for “owner occupied properties”, but sometimes the child’s credit is just too bad or over-loaded and the parents have to obtain investment property financing.
Another name for a “co-signer loan” is a “blended ratios loan” b/c lenders blend all the income and all the debts of all borrowers.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167