Profile picture for Caddy45

MI-can parents buy house and I just pay them or should co-sign?

I will not qual for loan solo(long story) (only looking for 50-100k) however parents can buy or co-sign--how does this work in MI and which is best?  can they (credit score for them 900+) mine mid 600's--just get loan and I pay them or bank directly? just trying to figure what is best way to do this--
Thanks in advance for any info
  • April 07 2011 - Independence
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (7)

Profile picture for wetdawgs
The first priority (if I were in your shoes) would be to get off the mortgage for your ex-spouse's property.   Hopefully this was covered in the divorce proceedings, and it is now critical to force the issue.   If ex can't afford to refinance, push (with your attorney) that ex sells.
  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I would suggest you sit down with your loan officer and go over your credit to determine when you might be able to obtain a loan on your own. You need to address the mortgage your name is still on. Late mortgage payments are very detrimental to your credit. The longer that goes on the longer it will take your credit to recover. Have you found a lender that will do a co-sign situation with you name on the loan with your credit issues?

There are some lending institutions that will refinance a home based on ownership on the deed, not who is on the loan. This is why I suggested you check into having your name put on the title after close of escrow if you are not on the loan. Ask your lender about that and check that possibility out with other lenders if they do not provide that option.

The tax benefit for your parents might be advantageous to them and might be a nice payoff in light of your circumstances.

Right now I would suggest you work on improving your credit by tackling the mortgage you are currently on and work at rebuilding your credit after the bankruptcy. Renting isn't the worse thing, but if you have parents that are able to help you purchase a home, consider yourself very lucky to be able to take advantage of a good time to buy.

Good luck to you.
  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Caddy45
Thanks for all the answers--I should apologize for not providing some more details--
*I am thinking condo--staying for >5yrs(at least) and yes own it eventually
*want to know what is best for parents as well(tax implications etc)
*I wont qual due to bankruptcy and name still on mortgage from divorce(and ex has been late, hence my credit)
*I do have decent income--approx 70k (after CS and Alimony)
*I would like to use this to improve my credit ( i won't be late or miss payments!!)
*should I just rent?
Thanks again very much..
  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

You've gotten some good advice here, but one thing I would want to add is the tax consequences. Your parents, if they obtain the loan and you just make the payments without your name on the loan, will get the tax benefit so you will have to be aware of that. It may be worth it to you for them to have that benefit, but you will need to talk to your tax person regarding that issue. 

I agree with both answers that co-signing is very risky for your parents credit if something happens you miss payments. If your parents get the loan and you make the payments, you may want to see if you can add your name to the deed after closing. This won't make any difference on the current loan, but may be a benefit if anything were to happen to your parents and in the event you are able to obtain your own financing, it may be easier to obtain refinancing rather than getting a whole new loan depending on your lender.

  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If possible have your parents buy the home cash and then you purchase the home from them on a land contract.  They gain the interest on  the loan and you gain the homestead exemption and tax and interest deduction.

  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Your parents can be your lender if they have the cash. Co-signing for a mortgage is the same as applying for the loan. If you fail to make a payment their credit is blemished as is yours. Mortgage loan rates are based on the lowest middle score any borrower applying for the loan. So if your score is low (mid 600's) then on a conventional loan there would be loan level pricing increases to the final loan rate. One thought is FHA - lower qualifying credit scores than conventional loans. Again, if your parents have the cash - they can probably get a decent return on their investment (from being your mortgage company), you get a loan at a great rate, no mortgage insurance and at favorable terms. If you would like to talk more - email me at [Contact info removed by moderator]

Hope this was helpful.


Jeff

  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for wetdawgs
The "best" way to achieve this depends on what your goals are.  Is your long term goal to own this house?   Are you not qualifying because of income or because of credit scores?   I tend to think that one should identify the issues and work through the issues and only purchase when 100% able to do so.

For your parents, the best approach would be to buy the house, rent it to you,  and call it an investment property.  

Co-signing is something that you should never request lightly.   Make sure your parents know that if they co-sign, they are 100% responsible for the mortgage (etc) payments even if you are a penny short - and the loan will appear on their credit report.   If you goof on payments, you are messing up your parents' credit reports for a very long time.

  • April 07 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.