I have a young couple with very little income because the are PhD candidates. One of the fathers has agreed to help them get a loan. Can they do this and still have title in their name only?

thanks,
alan

Yes but only on Closing Costs as a gift. Get ready to give a letter to the UW. If the father wants to give more than 3% of loan amount he would have to be included on the loan.

Ways to go through this loan since school loans should be on differment:

1)
Scores over 660 could possible get a NO DOC loan to 100%. Rate suck but if they can handle it than its a choice.

2)Put father on loan than when they est. good enough jobs they can refi father off.

Question? Is the property in the same county as the father?
If not than the father could possible purchase as a 2nd home/vacation home. Why? Rates lower.

Ok.

The property is going to be purchased as a 2nd home because they are in different counties. I should have written the offer differently than I did. I have to rewrite the contract so that the Father is now the purchaser instead of the kids. I specifically asked the MB if I had to do that and he said no. Now things seem to have changed.

Thank you,
Alan

The 2nd home's interest rates will be higher and harder for him to qualify because he already has a primary residence. If he was to use the 2nd home as a rental property, provided that there's proof that the couple is paying rent, then the 2nd purchase goes smoother with better benefits.

If the father wants to add on the couple afterwards on title... he can. If the couple wants to solely be on title... they can ask if the father wants to quit-claim it over.

Also, there are loan programs out there for graduates, you'd just have to look for them. I wish I knew some on the top of my head but they're out there.

All the Best,

The parent can be on the loan as a non-occupying co-borrower. On the loan app check the box that says the assets of someone other than the borrower will be used and then on page three of app check no where it says will the co-borrower occupy the premises. You should get an accept.

Also if the kids are degreed professionals and working in their field of major you can get a letter from the employeer that says the employeer forsees their prospects of continued ewmployeement are excellent for these borrowers and fannie/freddie waves the 2 year work history requirement for underwriting.

First things first, second home rates are the same as primary residence. The qualifying of the loan is correct he will have to show the ability to qualify with both mortgage payments.

Some lenders will require that all borrowers who are on the note go on title and no others that aren't on the note can't be on title.

Your advice to have dad quit claim them afterward is disturbing. While it rarely happens, if the lender catches wind of that there is a little thing in the mortgage called an accelaration clause that enables the lender to call the note due in the event of any change in ownership, hence when a house sells (change in ownership) the note must be paid off. A quit claim is in fact a change in ownership. If you have never read one, take the time to read a mortgage in its entirety.

As far as programs for soon to be graduating clients or someone who will have a large increase in income there is a thing called a temporary buydown, it is rarely used but available.

One other thing, if the father in fact has no intentions of actually using this home for himself personally then declaring it a second home is essentially mortgage fraud. If it is strictly going to be used in his name for his kids I hate to tell you but it is an investment property

I am a licensed loan officer in ky. I had a client whose dad was in Ohio. She was the borrower and dad was co-borrower. Non occupying co-borrower who is family is allowed on conventional loans. forget the rest of this noise. Go get an experineced loan officer.

Thanks Bourbonduke.

What professions are the couple in? This can add some light in regards to niche lending.

First things first, second home rates are the same as primary residence.

Sometimes but more commonly 2nd home is a higher rate and a lower LTV. 2nd home will likely not work because the father resides in the same state.

Non-Obligated co-borrower is an option. If they have conforming scores it would work. Also FHA if they do not.

We are missing credit score information though. We do not have exact direction to give without that but everything mentioned above is an option but quit claim and 2nd home is not safe for anyone involved.

[QUOTE]Originally posted by Greg Phillips:
[QB] First things first, second home rates are the same as primary residence.

Sometimes but more commonly 2nd home is a higher rate and a lower LTV. 2nd home will likely not work because the father resides in the same state.


Maybe it is different in other states, I have done dozens of second home purchases in south florida and never has the lender charged a higher interest rate, yes LTV can come into play but you can still do a fannie mae second home and and not get hit to the rate

Well I think this has been a good discussion even without the specific credit information. The transaction that I was questioning has closed.

Next time I have clients that want to do this I'm going to do things differently. We worked with the advice that we had at the time and ultimately everyone is happy with the outcome so there you have it.

Sorry Greg. Yes a true conforming loan on Fannie or Freddy has no rate hit for 2nd home unless the investor enforces one.

All other programs normally are a higher rate.

Greg do you run DU on all your deals even when they are not a 620+?

I had a level 2 on a 564 in December and did 5% down on a manufatured home. It was very nice.