Helping my big brother keep his home and buy a short sale

Asked by W, South Orange, NJ Wed May 14, 2014

So i currently live with my older brother in his house in SF. Before it was a nightmare being at the house because of our neighbor but they have finally moved out and we are at peace. Throughout two years my big brother tried finding a new home but his income had not increased enough to be able to apply but finally he has less debt and caught a steal with a short sale of a home in San Bruno, CA. I really want to be able to keep the house we have now but he doesn't qualify and i think all they offer him is a type of loan where if he keeps both he has to either put 20% down on the other home or get a loan program where he pays the 20% over a period of time with the home loan, but i think it's separate. We tried getting my income and credit score involved with the transaction and it still wasn't enough. Now we have our Dad who owns a property, retired/perf cred, and owes nothing (house fully paid) but has no actual income but social security, trying to help us. Is there a better solution?

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Fri May 23, 2014
It sounds like your brother is a co-borrower on the loan with you on the home you all live in now, and he's trying to buy another home.

He has to prove that he has the ability to repay. It's one of the latest outcomes of the financial crisis in 2008. If your brother can't prove that he can buy another home while having the current home, refinance the mortgage on the current home and take him off. That way he will be qualifying for what he will actually pay. It behooves him to have the home you all live in, in his name now because he won't be liable for it once he moves out.

The moral of the story is that buy what you can afford. If he can't qualify for a home, he's over extending himself and in the end you will put yourself in a bad situation.
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Terry Bell, Agent, Santa Rosa, CA
Thu May 15, 2014
I suggest you contact some of the mortgage brokers that are listed on the toolbar on the top of the page for some suggestions. One thing to consider is that you have to decide which home you are declaring to be your residence and which one then becomes an investment property. First, review the contract on the purchase of the short sale to see if that was purchased declaring that would be your primary residence, as the mortgage broker will want to know that. Perhaps your father can help with the 20% down, or the broker may have some other suggestions. Best, Terry Bell, Realtor
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Ryan Rudnick, Agent, San Francisco, CA
Thu May 15, 2014
I wouldn't suggest getting a loan without a down payment. The second loan for the 20% you would have otherwise put down will likely have very high interest rates.

Will you be living in the home in SF, or moving to San Bruno as well? Perhaps you could rent out the home in San Francisco to offset the costs of owning two homes.

The best way to come to a solution here is to talk to a real estate agent and a mortgage broker to discuss both properties and your brother's financial situation in more detail.

Hope this helps!
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