Expert: Craig Ballhagen - 9/24/2009

Question
QUESTION: I am wondering. My father in law is selling his mothers house to my wife and I. The first appraised value of the house is 143,000, I am unsure what they will sell the house for. My wife has little better score than I do but I have the most income at 53,000/year and been on the job for 3 years. My father will be a co borrower will we be able to do the tranaction under the gift of equity loan requirements.  Thanks

ANSWER: If you are using a non occupying co signer, you would be best to go with an FHA loan.  All of the equity and closing costs can be gifted.  If you make 53k you shouldn't need a cosigner unless you have allot of debt.  Your scores need to be above 620 for FHA and you can not have any late payments on any accounts in the last 12 months.  Please let me know if this answers your question. If not please re send the questions.  thank you

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QUESTION: I know that my score is not in the 620 that is the reason for the co borrower. My wife stayed out of work for three years caring for our 3 kids before they entered school age

ANSWER: A co signer does not off set your scores. It only helps you income qualify.  Probably the best thing for you is to do a lease option and by the house in a year or 2.  That will give you time for your credit scores to come up.  If your father is going to be living in the house as a co borrower, then that is different.  He would be on the loan by himself and you would refinance him off later..  Please let me know again if this helps you out or not-thanks

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QUESTION: To get this clear. Even though I have the co borrower, I would have to do a lease option? Is there a ballon payment at the end? He is not living with us. So you are saying that there will no way to do this type of loan?

Answer
With any mortgage the person who has the lowest scores is how the loan will be scored qualified. If it is just you and your wife living in the house you want to buy, then a lease option is the best way.  A lease option allows you to set the purchase price now and make payments to the current owner for a 2 or 3 year period.  Then you would go out and get new financing at that time.  Each monthly payment you make would have a portion go towards a down payment. For example if you paid $1000 per month, $800 could be for "rent" and $200 would go into your down payment account.  You can set up what ever terms you like with the current owner.  I would go online and Google "lease option" or consult a local real estate attorney.  
The only other way is to have your dad by it as a rental and then later buy it from him.  You are welcome to call my cell anytime for more details 208-713-3309 or I can call you.  Iam in Boise.  thanks so much for your question