As Realtors, we are frequently talking to folks who are trying to put all of the pieces of the housing puzzle together with regard to their family.
One concern we have heard about over the years is how to help a parent who may not be able to qualify for a mortgage on their own due to lack of monthly income.
One interesting lending program helps with just that issue. Mike Echery with Change Mortgage told us all about it.
It's called the Family Opportunity Mortgage and through this program, adult children can obtain a mortgage for their parents and can get the same favorable loan terms as if they were going to occupy the home, even though they won't. The loan is a conventional loan with a fixed rate.
By using a program like the Family Opportunity Mortgage, adult children can utilize down payments as low as 5% of the purchase price and can also utilize the lower interest rate of owner occupant loans. Utilizing this program can be a win-win for all parties as parents are ensured housing and the adults kids can take advantage of being able to purchase real estate with very favorable terms.
The adult child is considered the owner occupant and the parent does not need to go on the mortgage or on the title to the property. The adult child can even already own their own home and still take advantage of this program as the home for the parent is also considered a primary residence.
Lending programs like the Family Opportunity Mortgage are very helpful as, typically, second homes and investment properties require higher down payments and a higher interest rate. These additional costs make these homes quite a bit more expensive to purchase on the front end and then also more expensive on a monthly basis. The Family Opportunity Mortgage alleviates these issues and can allow for greater flexibility for families trying to assist parents without means to purchase a home on their own.
If this program is of interest to you, don't hesitate to reach out. We'd love to tell you more about it. Or if you'd like to connect with Mike directly, you can reach him at [email protected].