Williamsand, Home Buyer in West Bloomfield, MI

Crazy Situtation-Will this work?

Asked by Williamsand, West Bloomfield, MI Fri Jun 24, 2011

Heres the current scenario I find myself in:
I have been deployed to Iraq for the last 10 months and am excited to be coming home in a couple months. A few good friends who I am deployed with have come up with a "crazy idea"- combine our cash in order to purchase a house in the Mount Pleasant area, for around $150,000, as all 3 of us will be attending Central Michigan University. I am currently armed (current financial situation) with a credit score of 635 and $23,000 cash in hand. In fact, all 3 of us have similar financial situations(lots of cash and nothing else ha). We also all qualify for the VA home loan. Seeing as though we could split a down payment and share the mortgage, would we even be able to get approved by a lender if we use this situation?? Will this worK??? I have heard the horror stories about sharing mortgages and the old "it will never work out" jingle before. Ill be leaving that mess for a lawyer.

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Answers

7
Well, don't leave that mess for a lawyer - it's like putting $23,000 in a bag under a tree in the park.

This probably won't work, because lenders like to know that somebody will be able to pay the mortgage if everyone else runs away. But even if it does, you guys really need to hit a lawyer as soon as you get the green light from the lender, and forge a partnership agreement. Even if you guys work well together, you, as a veteran, should recognize the value of planning for trouble. One of you could die or become incapacitated, that person's family may have a very different plan that you two survivors do. Or one could marry, get divorced, and find that spouse as your new partner!

I'm glad you're back safely.

All the best,
1 vote Thank Flag Link Fri Jun 24, 2011
There are always exceptions to the rule; so it might work. But will it work socially?
As a suggestion, rent something for a couple of months while you're looking......see if all of you can live together under one roof.
Web Reference: http://www.321property.com
1 vote Thank Flag Link Fri Jun 24, 2011
good evening... call first national bank in east lansing....they are a portfolio lender (they don't sell to fannie or freddie) and may work with your situation....all three of you should try to preserve as much cash as possible..for rainy day money...i also suggest looking for something less expensive...va loan is not going to happen, mainly becuase of credit scores....
good luck to you guys...
bob mcclure
percentPlus
Web Reference: http://LoaningMichigan.com
0 votes Thank Flag Link Fri Jun 24, 2011
Hello Williams!
First, thank you for your service to our country. It is very commendable that you stepped up and now plan to seek higher education.

Having had discussions with my son about his long range plans, I can relate. Here are some items you might find helpful.

1. Loans are based largely on income. If you can show you have income that is consistent, you can present a good profile. The earlier suggestion that you rent first may make more sense than buying right away. In fact, if two of you can find employment right away that vastly improves your profile.

2. I wasn't able to find any prohibition regarding non-related military members sharing a mortgage. It is unusual, but should not be a detriment. The challenge you may find is that three or four years is a very short period of time for home ownership as an investment. If you plan to work in Mount Pleasant for several years beyond college, that will present a better profile. Mount Pleasant may have a better employment picture, too. Talk to a counselor at the college. BTW: Student jobs typically are not good paying jobs. And, some college town economies are better than others. There are at least eight institutions of higher learning in northern Colorado (which includes Denver). Two communities - Boulder and Fort Collins -have economies that are the envy of the nation. A third has a very weak economy.

Generally, college towns tend to be more recession resistant. You can learn more by speaking to some local agents to get the lay of the land. Some will correspond by email.

In Michigan and elsewhere, cash is king. Cash buyers often get better deals. If your combined funds can make a large enough down payment, then you might have some success negotiating an owner-carry. Also: VA home loans are largely designed for military personnel with little or no cash for a down payment. Besides, the rate may not be the best. Shop around.

My final thought on a home as an investment is prices are great now. Even if you don't plan to live in a home for more than four years, that doesn't mean it can't be an investment. If all three of you are planning to keep if for 10 years or more, that makes the most sense. So, when you speak with real estate agents, make sure you ask if they also offer property management.

In this economy, young and ambitious is not held in the same regard as it once was. But, if you're like most of the military personnel I have known over the years, challenge is your business.

I wish you the best of luck. God bless all of you.

Here are resources:
http://www.valoanhomes.com/
http://ncfhaexpert.com/va-loans/who-qualifies-for-va-mortgag…

http://www.gomortgagerates.com/down-payment.html
http://portal.hud.gov:80/hudportal/HUD?src=/program_offices/…

http://credit.about.com/od/creditrepair/tp/improvecredit.htm
http://financiallyfit.yahoo.com/finance/article-112123-8543-…
http://www.nytimes.com/2011/02/19/your-money/19money.html?_r…

http://www.nytimes.com/2011/02/20/realestate/20mort.html?_r=…

Best,
SuZ
PML of Longmont, CO
0 votes Thank Flag Link Fri Jun 24, 2011
First of all Thank You for your service. I don't see any reason why it wouldn't work. You're able to put a large chunk down so as long as you all can qualify for the mortgage there shouldn't be a problem

Have a Great Day!!!

Karen Paytas, GRI, CMS
Realtor
Real Living Kee Realty
586-709-8465
kpaytas@mirealsource.com
0 votes Thank Flag Link Fri Jun 24, 2011
There's nothing wrong with thinking "outside the box" but it can come with strings attached.

Bill
0 votes Thank Flag Link Fri Jun 24, 2011
I've had three individuals on a contract before here in the Metro area. Not sure it's possible in Michigan. As for the issues with three people involved, I'd think it's a better situation than renting with three people. Godd luck with it and thank you for your service!
0 votes Thank Flag Link Fri Jun 24, 2011
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