home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Stories For Salespeople
Loan originator and broker news and stories. Advice about improving mortgage loan originations. Insights to and profiles of mega-producers.
sales stories | sales books | originator newsletter




Industry Commentary


Many Ways Parents can Help in Property Purchase

Gifting, co-purchasing & co-borrowing provide options


By DAVE HERSHMAN

September 5, 2003


Owning a home is a dream that is shared by millions and millions of Americans. In 2003, the national home ownership rate reached a record high as almost 70% of all families owned their own home. A significant number of families were able to reach their goal of home ownership in the past few years because of record low interest rates. The development of mortgage programs specifically targeting first time buyers has also helped the cause. These programs are designed to help with three areas renters traditionally have trouble when attempting to purchase -- cash, credit and income.

When considering purchasing, it makes sense not to ignore traditional sources of aid such as our families. Traditionally, the American parent has been a significant source of help when their offspring decides to become part of the community of homeowners. Here are a few important ways in which parents can help their children purchase real estate.

Alleviating cash shortages through gifts. According to major surveys, the number one obstacle to owning a home is the shortage of cash. Though many mortgage programs now require smaller (or no) downpayments in order to purchase a home, at least some capital must be provided by the prospective homeowners. Most mortgage programs allow some or all of the liquid assets needed for the downpayment and/or closing costs to be provided through a gift from an immediate relative such as one's parents. The most liberal programs with regard to the provision of gifts are FHA (Federal Housing Administration) and VA (Department of Veteran's Affairs). FHA is a very popular program for first time buyers and it allows all of the capital necessary for the purchase (typically 3% of the sales price) to come from a gift. FHA even has a special bridal registry program and allows unsecured loans from immediate family members.

  • VA loans are for the benefit of active military and veterans of military service. The majority of VA loans require no downpayment and therefore the use of gifts would typically be for those who need the help with closing costs (especially when sellers are not contributing towards such costs).
  • Conventional programs tend to be less liberal with regard to the use of gifts. In many cases conventional programs require at least three to five percent of the money to come from the purchaser, unless the gift constitutes 20% of the total purchase price of the home. More recently, low-to-moderate income homebuyer programs have been introduced which have liberalized requirements regarding gifts.

Purchasing together for income support. Purchasing a home with your children may enable those who do not have enough income to qualify for a mortgage to finance their home purchase. Once again, mortgage programs vary with regard to the allowance of co-borrowers and FHA contains the most liberal requirements. Under the FHA program, immediate family members can help a relative purchase without living in the home themselves (nonowner occupant co-borrowers). VA is the most stringent with regard to co-borrowers, as only the spouse or another veteran who will live in the home can cosign. Conventional programs vary with regard to their requirements, but once again these have become more liberal with the growth of low-to-moderate income programs.

Purchasing together for credit support. One way a parent may help is for those children who have no credit or a substandard credit history. It should be noted that adding a co-borrower with a clean credit history in no way erases the existence of a poor credit history. On the other hand, a strong co-borrower may be able to make the difference in cases where the credit history of the children is close, but not quite up to standards.


Cash, income and to a lesser degree, credit. The three major barriers to obtaining a mortgage and reaching the American dream of becoming a home owner. Help for overcoming these obstacles may be no further away than going back to your roots. With rates a bit higher and home prices up -- their help may be needed!


Dave Hershman is a mortgage industry author and speaker -- with eight books and hundreds of articles to his credit. He also heads OriginationPro.com Mortgage School. You can email Dave at [email protected].


click here for more articles by Dave Hershman



SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders