“Hi Gary. I know you always say to talk with a banker before looking for homes, but my parents will co-sign for me and loan me money for a down payment. Do I still need to?”
***ANSWER:
Yes!
I had a client in your exact situation and it turned out that having their parents co-sign actually HURT their chances of getting a loan. (I ended up having to loan them $16,000 so they could make the purchase.) So don’t assume that they’ll help you.
Some things to know about having a co-signor:
The co-signor’s debts are also taken into consideration (that’s what happened above)
Most programs still have a limit on the occupying borrowers’ debt ratio, no matter how much the co-signor makes
Some programs require that when using gift funds, a percentage of the down payment must be your own money
When someone helps you with the down payment, they’ll be required to sign a statement that it’s a GIFT and not a loan
To be sure you’re in the right price range and are comfortable with your payments, the best advice I can give you is to talk with my preferred lender asap before you start looking at homes.
You can call me at (858)457-KENT and I’ll be happy to put you in touch with him.
Automated Notification of Distressed Real Estate in San Diego
