Co Signing A Kiddie Condo Loan

Co-Signing A Kiddie Condo Loan

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College students can apply for mortgages if they areemployed and have a co-signer, many of the lenderstandards are stricter now, but it’s still a possibility forcollege students to own their own place. That fellowcollege student in your class living in the condo a fewblocks from campus may actually be a homeowner.With just a little help from mom or dad, you could be ahomeowner too. When a parent is willing to help theirchild become a homeowner their not just teachingthem how to buy a house, but they’re teaching themhow to own a home. It’s a great opportunity to teachyour kids financial stability too.



If you’re in a college town, employed and arefinancially responsible it’s possible a kiddie condoloan is for you, however there may be some setbacks.These particular mortgages require a cosigner andmany lenders are urging their clients against co-signing loans. It’s a really good program for youngadults, teaches them to invest in their properties andhelps them to learn financial responsibility



More Strict GuidelinesEver since the housing meltdown, the federalguidelines for all mortgage programs are a lot stricter.This includes the kiddie condo loan program. Up until2008 you could apply for a loan with no income and nocredit history, as long as you had a family member co-sign for you. The lender would then just use theparent’s credit score to qualify for the loan. In today’smarket the lowest credit score among the borrowers isused to qualify for the loan.



Many students who use the kiddie condo loan programoften times will have a renter to offset costs, howeverwhen you’re applying for the loan initially, rentpayments are not and cannot be factored in for loanapproval. Even after approval young adults need to beresponsible about who they let rent. Typically, it will befriends who you consider your roommates, but it’simportant to know you’re the landlord and they’re thetenant. So it’s always a good idea to write up some formof a lease, especially if problems arise. The documentshould be written upfront and clearly indicate rent andany other expenses your tenants will be responsible for.



HUD has guidelines for borrowers, like students, whohave limited credit histories. Such as the borrowerscan’t have bad credit, the borrower planning to live inthe home must have absolutely no delinquent history.This includes delinquencies on rent, and no more thanone 30-day delinquency to other creditors, such as acredit card payment or car payment, excluding medicalpayments.



Parents Proceed With CautionIts important parents understand that as a co-signer they arejust as much responsible for repaying the debt in the event themain borrower defaults on the loan. It’s their credit score andhistory at stake when they co-sign for a family member andany potential penalties or late fees will fall into their lap. If themain borrower defaults it’s the co-signers credit that is goingto be damaged. If they do decide to co-sign, the co-signer hasto show proof of enough income to pay their own debtsincluding the student’s new mortgage payment. It will take awell financially stable parent to qualify. Also, being listed as aco-signer on a family member’s mortgage could make itdifficult for the co-signer to buy other property or qualify forother loans.



These loans however, aren’t limited to only parents orgrandparents helping their children. According to HUD co-signing borrowers can include siblings, stepchildren, nieces,nephews, cousins and even unrelated people who can showproof of a longstanding family-type relationship. These loansalso aren’t limited to only condos despite the name “KiddieCondo Loans”. Always proceed with caution before co-signing for a family member. They are going to be new athome ownership, and that comes with a lot of responsibilityincluding being able to afford issues that arise after they havemoved in. Broken A/C, broken refrigerator, roof leaks, etc. Besure that you have confidence that who you’re co-signing foris mature enough to be able to handle these unforeseencircumstances.



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Justin McHood is Americas MortgageCommentator and has been providingMortgage commentary for over 10 years.

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Co Signing A Kiddie Condo Loan