A few of the many benefits that kiddie condo loans offer are, allowing employed college students to obtain mortgages with a co-signer and the more lenient qualifying requirements. That college student in your class that lives just a few blows away from campus could actually be a home owner- with a little help from their mom and dad by them co-singing.
Using a kiddie condo loan is a great way to teach college kids financial responsibility. Think of it as teaching them how to own a home, not just buy a house. While kiddie condo loans are a great loan program for college students they still require a co-signer.
Parents Hit the Brakes Before Co-Signing
Mom and dad should keep in mind that being their children’s co-signer makes them legally responsible for repaying the debt if the borrower defaults on the loan. Parents need to be aware that if the borrower does default on the loan, it’s their credit score at risk and they will be responsible for any penalties and late fees.
When a parent decides to co-sign for the borrower they will need to provide proof that they have enough income to cover their own financial responsibilities as long as cover the loan in the even the borrower defaults. Parents also need to be aware that co-signing on the student’s mortgage means it could be hard for them to receive a home loan elsewhere if they attempted to buy a vacation home or rental property.
Kiddie Condo Loan Guidelines
Ever since the housing meltdown in 2008 the federal guidelines are a lot stricter now for any kind of mortgage, this unfortunately includes kiddie condo loans. Up until 2008 a student with no income and no credit score could get a loan, now students need to be employed, but also need their mom or dad for co-signing on the loan. Today, guidelines require that the lowest credit score among the borrowers be used for qualifying. One benefit to these loans however is the borrower is allowed to implement a roommate and charge them rent. The extra income the renter brings in can help with the expenses associated with college life.
How it Works
There are certain requirements the HUD has in regards to kiddie condo loans, such as, borrowers or students may have limited credit history, as long as they don’t have bad credit. The borrower must also not have any history of delinquency on rent and no more than one 30-day delinquency to any other creditor and must not have any accounts in collection not including medical bills.
Co-signers are not limited to only mom and dad, as long as the family member is related by either blood, marriage, or law they can co-sign for the student. Loans are not limited to only condos either, despite the name kiddie condo loans.
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