Friday, September 18, 2009

Kiddie Condos

Parents who want to buy a house for their children who live in a different town from the parents can do so using an FHA loan that is nicknamed "Kiddie Condo". This program is the only way the parents can get the lower down payment and lower interest rate of an owner-occupied loan. Otherwise, they have to buy the house as a second home or worse yet, as an investment, which is much more expensive. In recent years, people have also started using this same program to buy a house for their parents.

Catherine Elliwood at American Home Mortgage just sent me this information: FHA rules allowing borrowers to use owner-occupied financing for their children and aging parents is changing. The occupying co-borrower-- the child or aging parent--MUST have traditional credit, typically defined as at least three trade lines for a period of 24 months. So if you plan to purchase property for your child in college, you need to start with credit early. Get gas cards, secured credit cards or store cards in the child's name. Be sure they keep their balances low and repay on time. Remember, adding a child to an existing account as an authorized user will not contribute to his credit profile anymore.

If you need more information about the FHA Kiddie Condo program, please call Catherine Ellinwood at 954-1907.

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