There are many reasons you may not qualify for a mortgage on your own, but a common one is insufficient income. Student loans can tip you over the debt load limit. It could also be that you haven't found the right long-term job yet but have a couple jobs that mean you can afford the payments, but you haven't had the second job for two years so it doesn't count in qualifying.
With rising rents, buying can often drop monthly housing payments by a few hundred dollars… a significant amount when you are on a tight budget! Sometimes family members want to help, but simply helping with the down payment isn't enough.
If you have family members or long-term close friends willing to help, applying for a mortgage with a non-occupant co-signer could be a way to buy a home even if you don't qualify for a mortgage to buy on your own… they may even help you get a lower interest rate.
BECOMING A CO-SIGNER
It's a big decision to co-sign a mortgage for someone… it can really help them out, but it's also a big responsibility for you. When you co-sign for someone, you are putting your name and credit on the line as security for the loan. This means if the person you co-sign for misses a payment it also shows up on your credit report… and the lender can come after you for the money. Your name will be with the person you are co-signing for on both the mortgage and the title to the property.
FHA 3.5 % DOWN PAYMENT MORTGAGES
There are different mortgage options, including conventional loans, that will allow co-signers but FHA may be a good option for buyers wanting to take advantage of only 3.5% down payment… and perhaps also getting money from the co-signer for the down payment. For this program your co-signer must be a family member or close friend, most often a parent or grandparent.
TALK TO YOUR LENDER
There are many different possibilities… I referenced the one above because I recently had a young buyer who was lucky enough to have parents willing to co-sign for him to get out of paying rising rent and start building equity in his own home.
Talk to your lender to find out what might work for you!
Sharlene Hensrud, RE/MAX Results - Minneapolis-St. Paul Buyer's Agent
The HomesMSP Team - Sharlene, John, Angela – Twin Cities Realtors
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