AZentertain: Real Estate
Kiddie Condo Mortgages Hot Ticket in Arizona College Towns of Phoenix, Tempe, Flagstaff and Tucson
Federal loan programs help parents by providing easy way to offset student living expenses through the purchase of real estate.
Smart money managers struggling with a way
to pay college tuition and living expenses for children at University
are increasingly turning to real estate as the investment of choice
because of its short-term convenience and long-term rewards.
“Kiddie Condo” loans, so named because the mortgage product
used to purchase real estate for this purpose is encouraged by a Federal
Home Administration (FHA) program that allows parents, grandparents or
aunts and uncles to purchase real estate and share the risks and rewards
of the investment with the student. Students can immediately begin
building their credit history with timely mortgage payments while the
parents or other benefactors are building equity and avoiding the waste
of paying rent and other expenses.
This type of mortgage allows a person to co-borrow with a blood
relative (eg. parent, grandparent, sibling, etc.), who helps qualify
for the loan using their income or assets. Both borrowers take title to
the property, sign for the loan and build their credit profile.
Donna Larson, a mortgage specialist with Primary Residential
Mortgage, Inc., in Mesa, Arizona, recently bought a unit for her
daughter, Kristin, age 19, in downtown Tempe, Arizona at "The Vale," the
Will Bruder designed 40-unit condominium development recently completed
on University, east of Hardy. Already the unit has seen a substantial
rise in market value, as evidenced by a recent resale in the building,
which realized a greater than 40% gain for the seller.
In Arizona, there are still many affordable condos and
townhouses near colleges and universities that could be purchased under
this federal program and single-family dwellings can also be purchased
with this mortage loan. The FHA loan limit for this program is $237,500
for Maricopa County.
There are a variety of other local programs available for
parents wishing to invest in their children’s education by purchasing
housing instead of paying rent.
According to the FHA, the "kiddie condo" rule can be applied
for children who are currently in school (and may have no source of
income) or with children who are in the workforce. Debt-to-income ratios
are calculated utilizing the income and debts of all borrowers. Despite
the name, this solution does not require that the property be a
condominium and the age of the "kid" does not matter. In fact, this
solution can be utilized for a child borrowing up to the FHA maximum
mortgage. As of NOVEMBER 2005, the Phoenix area mortgage limit is
$237,500.
There are three big advantages to using this type of loan.
1. A low down payment (as little as 3% of the purchase price). The 3% down payment can be 100% GIFT.
2. A lower, owner-occupied interest rate on the mortgage vs. the higher investment property interest rate.
3. Helps the new borrower establish a solid credit rating.
With a Kiddie Condo loan program, at least one borrower must
occupy the property as his/her primary residence, but extra bedrooms can
be rented out to help cover the cost of the mortgage payments.
This is a perfect way for a college
student, recent graduate, or anyone otherwise unable to obtain a loan on
his/her own to buy a condo, town home or single family home with the
help of a family member.
The ability to deduct mortgage interest and
real estate taxes on Federal and State income tax returns are an added
benefit. (Consultant a tax advisor).
About PRMI and ArizonaMortgageFinders.com:
In addition to our correspondent banks, we have relationships
with over 110 private lending sources that offer lending solutions to
address special, non-standard financial situations such as: Stated
Income Loans, No-Doc Loans, Bank Statement Only Loans, Resident Alien
Loans, First Time Home Buyer Loans, 80/20 Financing, and much more.
Tempe, AZ (PRWEB) December 8, 2005 --
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