I am currently working with a buyer who is in the same situation. His mom passed away and to keep the house within the family, he is a co-signer for the mortgage, allowing his dad to still live there. My client does not pay the mortgage, and in fact lives in an apartment currently. The lenders do and donâ€™t look at this as debt. With a statement from his dad and proof that his dad pays, and not him, they now consider the payment his dad makes as income to him, so it basically washes the debt away. His financing was not affected by this at all. Weather he had this obligation or not, he would have been approved for the same amount with the same interest rate, as if he did not have this obligation.
My buyer spoke with 2 mortgage companies who were structuring the loan as I described. Here are their names and contact info: Jay Austin/Star Mortgage 508-941-5616 and Dave Kurzman/First Mariner Mortgage 617-438-9352. Best of Luck to you and thank you for the â€œBest Answerâ€!
Hello Joe. Initially, your credit report will show your parents' loan as a debt because your name is on it. Depending on the new lender's underwriting policies, a letter from your parents that states that they are paying the entire loan payment may suffice to exclude the monthly payment from the debt to income ratio. I had a client once who was able to get a loan because his soon to be ex-wife signed an affidavit that stated that she paid the monthly loan payments for the house that was on the market to be sold. Some lenders may not care about who makes the payments as they might see the fact that your parents could not qualify for the loan on their own as a risk. If your name is only on the second mortgage but not on title, I doubt that the new lender will see it as a good thing as your parents' house will not count as an asset in your financial statement. I think the best thing you can do is to discuss this with a qualified loan broker as they are familiar with the underwriting requirements of different lenders. Good luck.