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Your Source For Real Estate in the Gallatin Valley

By Timothy Hart | Broker in Bozeman, MT

Hot Topic: Kiddie Condos

“Kiddie” Condos 

Defined:

FHA’s Kiddie Condo Loan Program is a non-occupant co-borrow program allowing parents to assist their children buy a single family home or condo  as they go off to college instead of paying for the costs of rent or dorms. The kiddie condo is just a nickname for a whole realm of options available for buyers-not only condos. Both borrowers take the title of the property and sign for the loan together. 

Cons:

All borrowers have to qualify and pass a credit check.  There are ‘non-traditional credit’ options available for fresh young adults who may have not accumulated substantial credit yet.

Some of the other negatives that have come out of the woodwork as more and more people go with this option, and they all come down to overestimations. Parents overestimate the possible savings, the potential appreciation of a house in a college town, and they over estimate their child’s ability to serve as landlord and reliable co owner.  One must be sure they trust the integrity of their co owner as in any business deal and everyone must understand the risks that always come with investing in real estate.

  

Pros:

A kiddie condo loan program is a great way for young adults to get a taste of home buying and ownership. This builds their real estate portfolio as well as their credit.  FHA normally does not allowing non occupying co borrowers on loans exceeding 75% of the property’s value, but with the kiddie condo you can get a maximum of 96.5% if the co borrowers are related by blood.

Along with high loan percentages, kiddie condos offer a low down payment, a lower owner-occupied interest rate on the mortgage, and the tax benefits. Deducting mortgage interest and real estate taxes on a Federal Income Tax return can be split amongst the owners in accordance to whom pays what expenses on the house.

"It transcends just helping you with school," said Vita, who's now a software engineer for Microsoft. (Microsoft is the publisher of MSN Money.) "I got to learn to be a responsible homeowner. I learned about paying bills and taxes and about credit. . . . I learned to be pretty handy, and (when the house sold), it was the basis for a down payment on a really sweet place."

Please  contact me  if you have any further questions. I have helped a handful of families find their ideal living solutions with this program. You can be my next success story!

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