Posts Tagged “non occupant co borrower”

Homebuyers and Real Estate Agents often don’t realize that FHA allows a Borrower to co-sign as the **Non Occupant** Co-Borrower on an unlimited number of FHA loans.

Really? Yes Really.

Even though, unless there are special circumstances,  (like a forced job relocation or sudden and dramatic increase in family size) a homebuyer can really only have one FHA loan at any given time, someone who doesn’t intend to occupy the property can cosign/co-borrow with the buyer(s) that *do* intend to occupy the property without such a limitation.

Better still, FHA allows the total incomes and debts of all the borrowers to be blended together to arrive at one (overall) debt ratio.

This feature has enabled many a homebuyer who couldn’t properly document all of their income for example, to qualify for a home loan when their income alone wasn’t sufficient for qualifying purposes.

 

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A client called today, anxious since he had read online that cosignors don’t take title to the home they are helping the Buyer/borrower purchase.
Technically this is accurate, but not the entire story.
Over the years FHA has made a distinction between non occupant CO-BORROWERS and non-occupant COSIGNORS.

In fact my research shows that the only FHA programs that allow Non occupant CO-SIGNORS that are not considered CO-BORROWERS are refinance programs. And in my 15 yrs of doing this, I don’t remember the last time I saw a file with a Co-Signor as opposed to a Co-Borrower.
Here’s how it works:

NON OCCUPANT- CO-BORROWERS
• Must take title to the property (ie when Seller signs Grant deed, your parents names’ will need to be on there)
• Must sign the Promissory Note
• Must sign the security interest which in CA is known as the Deed of Trust and many other States known as the ‘Mortgage’ (see page 79 and 80 of the FHA 4155 handbook_

NON OCCUPANT COSIGNORS
• Do not need to take title to the home
• Must sign the promissory Note
• Do not need to sign the security interest which in CA is known as the Deed of Trust.

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