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How much of a benefit is it to have a co-signer for a new mortage?

We are trying to get pre-qual to purchase a foreclosure that we have our eyes on. Want to move quickly.  We are off on our income to debt ratio becasue I work at home (self employed) and cannot prove income. One of our options is to pay off more $ on our credit card and/or pay off our two vehicles (they are both about one year from being paid off).  We are wondering if we got a co-signer for the mortgage if that would help us get qualified faster.  We have a couple family members that are willing to help us out. Thanks for any info!
  • February 02 2009 - Greeley
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Answers (9)

I am not sure where Lewis Corcoran is getting his information on the 75% limit for non-occupant co-borrower, I have done these types of purchases in the recent past and we are able to use the normal 3.5% down, and only $100 down on HUD homes. There have not been any FHA changes either.  I know there are some restrictions when when purchasing from a family member (85% LTV), however this is not relevant to your situation and there are many ways to avoid this restriction.  We are a direct FHA lender and service our loans, maybe the 75% cap he provided was an underwriting overlay by his lender?  FHA allows for non occupant co-borrowers which may be a good solution for you.  Your family member can certainly help you qualify however, they will need to be able to support all your debt and theirs. Feel free to email me if you have further questions. 
  • February 03 2009
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Oh nice I live in Windsor too actually and office over in Fort Collins.



Go to www.mcbreo.com and select Colorado and then the area you are looking in and you can see the current list of HUD owned homes available.  Some pretty good deals.
  • February 03 2009
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Thanks Nic. We are actually in Windsor.  I just noticed you are in Fort Collins. Thanks for the luck!
  • February 03 2009
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Sounds good Jen good luck.  Also if you are looking for foreclosed properties keep an eye out for HUD homes.  There are alot in Greeley and FHA has a special program for the purchase of HUD homes as your primary residence which only requires $100 down payment.
  • February 03 2009
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Thanks Nic. I am not sure about pension or ss income, but we will find out the details tonight when we speak with them.
  • February 03 2009
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No their age will not be a factor.  Do they recieve pension or SS income to help in your qualification?
  • February 03 2009
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Profile picture for jenmopo
Thank you for your responses. Our co-signer possibilities are my husband's grandparents that own their home outright, so they do not currenlty have a mortgage payment.  They are financially secure, but are senior citizens, so I do not know if that will be a factor in their eligibility to co-sign.  We are going to speak with the bank today about this possibility.  Does anyone know off hand if their age will be a negative?  We have another option for co-signing, but they live in the Virgin Islands and we aren't sure if that will be a problem...it is considered a U.S. Territory, but technically, it's not part of the United States. 
  • February 03 2009
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Profile picture for Erez Cohen

Since you indicate qualification is an issue, FHA would be the way to go.  FHA allows for a non occupant co borrower so long as we look at their debt and housing payment as well.

  • February 03 2009
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FHA permits non-occupant co-borrowers.

A non-occupant co-borrower is a person who will not occupy the property, but is being added to the loan application to strengthen the profile is permitted.  Maximum financing is available under the following conditions:

- The non-occupant co-borrower must be a close family member or demonstrate a long-standing family relationship with the primary Borrower. If no such relationship can be verified, then the loan amount cannot exceed 75% of the purchase price.
- The subject property has to be a single family detached home, PUD, or an approved condo unit.
- The non-occupant co-borrower must have a primary residence in the US.
- A complete credit underwriting analysis will be performed for the non-occupant co-borrower. The income, assets and debt will be included in the loan information and will be weighed equally with the borrower.

  • February 03 2009
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