counselor4kids Posted July 4, 2003 Report Share Posted July 4, 2003 My mother-in-law is more than willing to co-sign a mortgage loan if it would help with interest rates, amount to finance, etc. Do lenders go for this?Also, we are members of a credit union that will do loans for no more than 80%. Is it likely that they would do an 80/20? Link to comment Share on other sites More sharing options...
smogtek Posted July 4, 2003 Report Share Posted July 4, 2003 That's how I bought our 1st home.Bought it before my wife's divorce was final so we had her dad co-sign. Not a problem. After the divorce was final, we took him off and put her on. Link to comment Share on other sites More sharing options...
counselor4kids Posted July 4, 2003 Author Report Share Posted July 4, 2003 Our income is fine, but our FICO scores are too low to qualify for zero down. If our score is our only deficiency can a co-signer help in that respect? I had heard that a co-signer could only help you qualify for a larger loan if your income was not great enough. Will a co-signer make up for lousy credit? Link to comment Share on other sites More sharing options...
smogtek Posted July 5, 2003 Report Share Posted July 5, 2003 I don't see why it wouldn't, but you'd be better off asking a lender or mortgage person about this.Hopefully firstsource (charles) will come around over the weekend and give you a better answer.Try re-posting under the Mortgage Questions thread. Link to comment Share on other sites More sharing options...
counselor4kids Posted July 5, 2003 Author Report Share Posted July 5, 2003 where can I find that? Link to comment Share on other sites More sharing options...
firstsource Posted July 5, 2003 Report Share Posted July 5, 2003 First of all, I hope that you will exhaust all other avenues before putting your mother-in-Law on the loan with you. It does a number of things to her credit, none of them positive, not necessarily bad either, unless she wants to buy another home sometime. Then DTI (Debt Ratio's) can become a problem Second, there are a lot of lenders that will not allow a "non-occupant" co-borrower. Third, the person with the highest income dictates which credit scores are used. So if you make 52% or more of the money, your scores would be used anyway. What are your FICO scores? There are some lenders that will give 100% at 561 and above. WOW, the interest rates are high, but as your situation improves you will probably want to re-finance in a few years. As life goes on and with better scores, and a lower Loan to Value (LTV), your rates will go down. Many banks and credit unions only take loans that are easily placed on the secondary market, and there is a large market for 80% loans, and not much for 20% second mortgages. So that is probably the problem there. However:One thought is that you should ask the Credit Union if they will allow a 100% CLTV (Combined Loan To Value). If they say yes, then you could possibly find a seller that would take a 20% second mortgage from you. This is also called a purchase money second or a carry back. Normally these are for 2-3 years, amortized over 30, but will a balloon payment due in the shorter amount of time. One last comment to SMOGTEK. I think that when you meant to take your ex's dad off the loan, all you did is take him off of title. If you did not re-finance, then he is still on the loan. Just in a REALLY bad situation of not having interest in the property that he has a loan on. I am sure that you are going to remain good friends for the next 30 years, but one note of caution. If he should go into BK, that goes on YOUR report. Same thing for you. For anyone that is divorced, make sure that you have closed out all mutual accounts, because your ex's negative history like FC or BK will get put on your report. Things like this are like super glue. they never seem to go off, forever-like 7-10 years.Hope that you are having a great 4th, and thanks for asking questions on this forum. Charles Link to comment Share on other sites More sharing options...
counselor4kids Posted July 5, 2003 Author Report Share Posted July 5, 2003 Would my scores be used to determine interest rates or for overall approval? She has been living in the same home for 20 years and has no intention of moving so she is happy to help us out. We have never been late on a rent payment in 5 years so she is confident we will do fine with a mortgage. My husband and I had scores of about 563, but that was the first time we checked in to them. We are disputing some information and trying to get some other info removed, so right now they are fluctuating. I don't know where they'll end up in a month or so. Everyone we have spoken to says that there is a slim chance that we may get in at 5% down, but we need to have scores of at least 580 for 100%. Link to comment Share on other sites More sharing options...
smogtek Posted July 5, 2003 Report Share Posted July 5, 2003 Good points that I had not thought about. We sold that house while FIL was still alive and purchased another. My FIL died shortly thereafter. We lost the 2nd home after I was injured on the job and out of work for 2 years. Had I known a little more perhaps I could have saved it. Oh well, life goes on. Link to comment Share on other sites More sharing options...
firstsource Posted July 5, 2003 Report Share Posted July 5, 2003 Counselor4kids:Scores would be used for both parts of the approval. They will indicate if you qualify for 100% or not, and/or if the rates will be low. I know that you know this, but no matter what the scores are, to go to over 95% LTV, you will be needing to use a sub-prime or an Alt-A lender. Alt-A Lenders are cheaper, but they require a certain amount of assets, approx 3 months total home costs, (PITI). Sub-prime normally don't care about assets, but I offer them to the lender as a fact that makes the loan easier to "buy" for them. Your loan officer has to "sell" the lender on taking the loan. If you think of this in this manner, it makes the silly things we ask for more logical. I work with a lender that will go with 561 scores, but realize that most want a 580 or a 600. (again, not consumer scores). There are SO many programs and lenders out there. Keep up the hard work in getting your scores to reflect your true situation. it is an important thing to do, no matter if you are getting a home loan, new car or home insurance etc. Charles Link to comment Share on other sites More sharing options...
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