Home Buying in 98225>Question Details

Yourgirl, Home Buyer in Bellingham, WA

Is it better to have my parents buy the house and I live in it paying the mortgage or having them co-sign on the loan? First time buyer/ poor credit.

Asked by Yourgirl, Bellingham, WA Wed May 11, 2011

So my parents in law have agreed to help us get into our own home instead of renting. Is it better to have them do a non-owner occupied loan? or co-sign on a loan in our name? We don't have great credit and have never owned a home before. Any advice would be great. I am worried that a non-owner occupied loan would really up the monthly cost of the mortgage since we are the ones that would be paying for the entire amount.

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Yourgirl - What nice parents! You also may want to consider the fact that your credit will improve if you are a co-signer on the note. Owning a home helps establish more credit.
I would sit down with a lender & discuss your options.
Good luck!
The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services
Phone: 508-790-2000
1 vote Thank Flag Link Wed May 11, 2011
This is a really interesting question. I have never thought to have my parents buy the house and have me live in it. For someone who has bad credit, it would be the best idea if you needed to move. I think it would co-sign on the loan at least. http://www.cashclosing.com/
0 votes Thank Flag Link Fri Jan 23, 2015
A local lender can look at the big picture. We are 100% portfolio and dedicated to your success, so our guidelines are flexible. We appreciate parents contributing to get you off to a good start. Call me!
0 votes Thank Flag Link Fri Jan 23, 2015
probably co signing route will be better .....assuming your credit will allow this ..try using a FHA loan as it allows non occupant coborrower and also allows a low down payment ( if needed )
0 votes Thank Flag Link Tue Apr 24, 2012
Many mortgage companies and banks can run both possibilities for you and show you very concretely which way would be best. I recommend you talk to your lender and ask them if they could find out which way would leave you with a smaller mortgage payment. But you should also consider that having a mortgage and staying current with your payments can be very good for your credit, so if you want to work on improving your score, it might be a good idea to have your name on the loan as well.
0 votes Thank Flag Link Tue Apr 24, 2012
If you are going to be making the mortgage payments I would highly suggest that your name be on the loan. You should be getting credit (pun intended) for making those payments.
0 votes Thank Flag Link Thu May 12, 2011
This question really depends if your parents..in law...are considering moving in with you.
How's your relationship? If it's too cozy you wife will be jealous, and if it's to confrontational you'll want to hang yourself. Is there a basement where you can lock them up if they decide to move in? This is important in considering your dilemma.
0 votes Thank Flag Link Wed May 11, 2011
If you have a 615 credit score and $30,000 down, you should be able to get financing without the NOCB assuming your income qualifies. You should see a licensed mortgage broker in WA and have them run your scores to see exactly where you stand. If your parents insist on "co-signing", just explain that their high scores won't get you a better loan or rate, it would only help you qualify for the payments. If you already qualify for the payments for the property you are seeking, you don't need them.
Web Reference: http://WeFixRates.Com
0 votes Thank Flag Link Wed May 11, 2011
I know that one of our credit scores was above 615 about five months ago. We carry no debt. We owe nothing to no one. Credit card companies are constantly sending us those offers. But they are a bit like vultures so that really means little. We are looking at houses in the $98,000 to $95,000 range with $30,000 down. I am just trying to figure out what is the best route to take in regards to the situation. You can't talk my parents in law out of anything once they have set their minds to it. Which is why I am trying to find a solution that wouldn't be detrimental to them. We are not worried about being able to cover the costs. But I am trying to figure out which option would be the best for everyone.
0 votes Thank Flag Link Wed May 11, 2011
don't forget Uncle Sam on rental income.
0 votes Thank Flag Link Wed May 11, 2011
The first question is: How poor is your credit?
A non-occupant co-borrower (NOCB) is effectively the same as a "co-signer" and what is important to note is that a NOCB cannot negate bad credit. This means that if your credit score is not sufficient to qualify on your own, there is nothing a NOCB can add to fix that. The only thing a NOCB brings to the table as far as qualifying is their income which can reduce debt ratios.

If you have a credit score of 580 or above, FHA allows a 3.5% down payment and your parents can be NOCBs if needed. a NOCB does not add any extra cost to the mortgage but does saddle your parents with significant liability. consider fixing your credit and waiting until you can qualify alone.
Web Reference: http://WeFixRates.Com
0 votes Thank Flag Link Wed May 11, 2011
You need to sit down with a lender or mortgage broker to review all of the details and figure out what the best situation is for you. He/she will look at everything from your income, debt, credit score, savings, etc. Good luck!
Web Reference: http://www.sallygrenier.com
0 votes Thank Flag Link Wed May 11, 2011
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