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Family Opportunity Mortgage program

College

Through the years, I have helped many parents purchase homes or condo’s for college bound children. Because of the high demand for housing around college campuses, this has often proven to be a great investment.

Last year, my son lived in an 8 bedroom house near San Diego State University where he attended school and played soccer. Rent was $700 per bedroom! Do the math. That’s $5600 per month in rent! How’s that for positive cash flow while you wait for values to rise. I’ve seen appreciation cover the entire cost of the education.

Until now, however, parents have had to accept higher interest rates. That’s because very few kids have the job history or established credit needed to be an occupant borrower. Even when parents co-borrow, we’ve had to contend with stand-along (debt) ratios.

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Posted by Marc Brinitzer on 07/20/2007 04:53 PM

Comments (2)

mortgage, kiddie condo, sacramento real estate

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2 Comments on Family Opportunity Mortgage program

JUL

2007

What is really special about the program? I do these types of deals all the time. Usually we just have the parents buy it as a second home. The kids live in it and mom and dad sell it when they graduate. Same great rate as an owner occupied primary residence.

What's special about this is that now you won't have to put your client and your company at risk to get owner occupied rates.

Saying it's a 2nd home when it's really not constitutes occupancy fraud. Sure, you can get away with it and it hasn't been highly scrutinized in the past, but that doesn't make it right. And in this environment, you may want to exercise a little more caution and discretion.

Also, 2nd homes are expected to be vacation or "resort" areas. Makes sense. Since many of these purchases are located in unlikely 2nd home areas or too close to the parents primary residence, this program will give your clients owner occ rates where they might otherwise receive a flat out decline.

And the "call it a 2nd home" strategy works poorly for elderly parents who we're often trying to keep close so we can keep an eye on them. No lender will let you do a 2nd home in the same town as your primary.

Thanks for the comment.

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