Home Buying in 90023>Question Details

Jrptcs, Home Buyer in 90023

I will be a co-signer on a fha loan but want to be out in six months after closing. Through a streamline refinace, of course all payments on time.

Asked by Jrptcs, 90023 Wed Nov 3, 2010

There will be three people on the loan, a fourth person has a credit score of 614 right now and would should be obove 620 before the six months after closing. The plan is to streamline refinace just to for me to swap with the fourth person or just take myself out of the loan as co-signer and leave the other two. All payments would be made on time for the duration of those first six months.

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feefibobecca’s answer
this is exactly what i am looking for.
looking to buy a hud owned foreclosure.
selling for 33k. valued around 75-85k.
which means it would be a great turnover
for anyone if i were to default, which i'm not,
have an excellent rental history at $750/mo
for two years and $565/mo at property before that.
looking for a cosigner to sign for first 6 months
while i build enough extra info for a refi.
Returning to same company worked for before,
off and on for past 11 years, currently returning
after 1 & 1/2 years as stay at home mother.
I really love this house, it is an excellent value,
the deal is very safe for co-signer, i can produce
an assortment of paid bills in my name and letters
of referrals from at least the last 3 years or so.
Just looking to stop renting and the ability to pay less per
month by buying, and i'm in LOVE with this perfect cheap little home.
0 votes Thank Flag Link Mon Jan 7, 2013
Snce you are waivering between he said / she said, I think it will be worth your while to speak directly with the FHA. The Web Reference below has their phone number.
0 votes Thank Flag Link Wed Nov 10, 2010
The only way for the co-signer to be removed is for the remaining borrower to fully qualify on their own. Appraisal would be required as would full income, credit, and asset documentation. Not a streamline at all.

How do you know the borrower with the 680 score can't qualify right now? What does insufficient credit history mean? Maybe it is sufficient.
0 votes Thank Flag Link Sat Nov 6, 2010
So is there any way that a co-signer can be removed from an FHA loan whithin six months after closing with each payment being made on time of course? Would i have any other options? The borrower has a score obove 680 right now but does not have sufficient credit history, payments would be done by him so would he be able to qualify on his own by FHA Streamline after the six months?
0 votes Thank Flag Link Sat Nov 6, 2010
A streamline refinance is a special set of guidelines FHA uses to allow the existing borrowers (no additional borrowers added, nor removed) to reduce their interest rate. The use of an appraisal is optional so theoretically the value of the home being refinanced could be LOWER than the original purchase price. I'm not saying that's a good thing for FHA to allow, but the program does not take value into consideration.

I'm not sure I understand the second half of your comment on Thursday evening.
0 votes Thank Flag Link Sat Nov 6, 2010
Thank you all for answering, from what i have read on streamline refinancing is that all that it's for is to get a lower interest rate as long as the property is worth more than the original loan and if the new paperwork didn't include my name than i would no longer be a co-signer. Is this accurate, i got this from EHOW website that explained FHA streamline refinaceing. Also, the home would be bought now for $180,000 short sale and is reported to be worth $195,000 or more with two units, 3bed-1bath & 2bed-1bath. Thank you again everyone, i am only twenty-five but have been seriously stressed out with my situation.
0 votes Thank Flag Link Thu Nov 4, 2010
The agents have it right but I thought I'd give you the perspective of an FHA lender - your plan won't work. FHA loans require all parties remain on the loan through the Streamline process. The only way to remove or add a borrower is for a full loan process.

Is there a reason you need to be on for the first 6 months that maybe we can fix now? Getting someone from a 614 score to a 620 is sometimes very simple and quick.

If you have any specific questions, just post back to the forum or give us a call.
0 votes Thank Flag Link Wed Nov 3, 2010
This is very risky for you. You cannot guarantee that property values will remain the same or increase in this time period. You cannot guarantee that interest rates will not go up. If values decline or interest rates increase, there would be no incentive to the buyer to re-finance or restructure their loan. Additionally, they may not qualify for the higher payments on their own.

I have been advised by several lenders that a streamline will not allow the removal of any obligors. So, as stated below, the remaining parties would have to do a complete refinance. A mere 3% drop in values (which could happen once banks resume foreclosures at the pace needed to retire all the defaulted debt) in the next 6 months would prevent a refinance from happening. Better to have the buyers wait until they can buy on their own merits. Good luck and Dare to Dream.

Shel-lee Davis, QSC®
Certified Distressed Property Expert – CDPE®
Short Sale & Foreclosure Resource – SFR®
Certified HAFA Specialist – CHS®
SSG Pro®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
0 votes Thank Flag Link Wed Nov 3, 2010
That's assuming a lot of responsibility for someone. Have you thought about all the details... If your friends don't qualify now on their own then chances are they will not in 6 months either.

Not recommended. To many pitfalls for you. I'm assuming your credit is the best. Why chance it?
Web Reference: http://TopRealtyTeamLA.com
0 votes Thank Flag Link Wed Nov 3, 2010
You should consult a mortgage broker and a tax attorney or accountant. Beyond the market hiccups, there are ramifications to your plan.

Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) 818.564.6591
http://www.thebremnergroup.com/news/
0 votes Thank Flag Link Wed Nov 3, 2010
Not going to work.

First, 640 is now the minimum.

Second, you can't just come off with a streamline, it would have to be a full FHA loan and you have to hope the value is still there!
Web Reference: http://fglick.com
0 votes Thank Flag Link Wed Nov 3, 2010
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