Real Estate Investor · Canon City, CO · Member since 2013 · 54 posts · 2 votes
Hello all, We are renting a home and fell in love with it,the problem is that it is for sale and there has been a spike in interest in it lately. Our son has really grown attached to our home and we really do not want to loose it.Our credit is not quite there, but we have a family member who is willing to buy it for us on the condition we buy it back from him with a little profit to be made when we get our credit where it needs to be. So the other problem is the 20% down because he would not occupy it. We can get the home for 95-100 thousand but we only have $5,000 to put towards the down.
Does anyone know of any programs or creative ways to get this done?
I really do appreciate any help and will return the favors when and wherever I can.
Things may be a little different in Colorado, but I am doing something similar with my sister. I would advise seeing a real estate lawyer and exploring the idea of purchasing the house in conjunction with your family member (i.e. both of you on the purchase and sale agreement, title {as Tenants in Common} and mortgage). You will also need a separate agreement covering your purchase of his interest in the home {time-line, price, fees & disbursements, etc).
His credit would still allow the mortgage to be placed with a lender. Having your name on the title and mortgage would aid in repairing your credit. Having his name on title, until you buy him out, will protect his interest in the property should something go off the rails.
Colorado has a first-time buyer program (Google CHFA) that will assist you with the down payment and closing costs. I bought my first home in Wyoming with a program like that. I think the most I had to put down was just under $1k on a $95 house. Good luck and keep us posted!
So anything above a 680 you are saying it is a done deal. How much down? Are there a lot of requirements? Does the buyer need to jump through hoops to get it done?
@Roy N. I have looked into co-ownership but the banks have told me that they look at the credit score of who is going to occupy the home. Is co-ownership the same as tenants in common?
@Michelle Y. Thank you. The problem is that my family member would not qualify as a first time home buyer and he would not meet the owner occupancy requirement, and our credit is just a little too low at this time. I will definitely keep everybody posted thanks for your time.
@Tom Goans Thank you. Our landlord is a great guy and unfortunately he has cancer. We have spoke with him about rent to own and owner financing and he is reluctant only because he does not know how much longer he has, which I understand.
@Anson Young Thank you. The last I checked it was around 585 (I was a little reckless in my younger years) and I am trying hard to repair it.
Sounds like you're saying he will buy it for you using your own down payment funds? Not sure they'd let him do that anyway, as he would have to provide proof of where the down payment came from. If I were you, I would call a lender and see what your options are. I believe as others have said that FHA will let a family member cosign for you and you'd still be able to do their low down options on a single family home. If he won't cosign for you, (and I wouldn't blame him as it's a big deal), the lender may still be able to help with special programs, so I'd rule out those options first.
Oh sorry Jason, I should have been more clear. I was thinking you could do the whole loan plus the down payment/closing costs with CHFA and not have to involve family at all as that doesn't always work out well. I think the first-time buyer programs are understanding of lower credit scores. If I recall, WCDA (Wyoming's program) offered lower interest rates for the mortgage as well. This would definitely help you build your credit and it's possible the mortgage may be equal to or less than your rent payment. My mortgage (PITI with the 2nd for the down and closing costs) was about $550/mo.
Tenants in Common is just one form of co-ownership.
If you would be providing the downpayment funds and simply need your family member to qualify the mortgage, have you asked the mortgagee if they would accept him as a guarantor to qualify you?
If you are applying for a mortgage as co-owners, then the mortgagee should look at both your credit history to qualify, not just the score of the one who will be living in the home.
So anything above a 680 you are saying it is a done deal. How much down? Are there a lot of requirements? Does the buyer need to jump through hoops to get it done?
Joe Gore
3.5%, Not any crazy hoops, but the normal w2s, paystubs, bank statements, credit check stuff.
2. Lease Purchase option (rent to own)- $5k down add money to your rent payment towards down payment secure in todays low real estate prices.
3. Family Member Financing preferably in a self Directed IRA owning the note.
Make sure that you have a legal document stating the terms and conditions, an amortization schedule any balloon payments etc. This way the IRA gets income for as long as you are paying and over 30 yrs it would triple their investment.