Your parents have helped you to become as successful as you are right now. You may have come to your point in life that you feel most financially secured that you’d want to give something back to your parents. The best idea that probably came to your mind is getting them their own house. But how would you do that? Here are some of the things that you might want to consider if you really want to get your mom and dad their own space to comfortably live in.
Tip #1: Cosign for Their Mortgage
One of the things that you can do to help them get a mortgage is to cosign for them. This is actually a great idea since you can use your financial information to get their mortgage approved. However, doing so will also make you liable for the mortgage payments that your parents will pay. So if in case they miss a couple of payments throughout their term, then that will also reflect on your credit history even though you’re not really staying in that house. Some experts would also say that cosigning for another person isn’t really a good idea because it would sometimes still have a negative hit on your credit score even though they’re consistently paying it on time. That’s why it’s hard for other people to decide whether they’d cosign for their parents or not.
Tip #2: Help Them with Paying the Down Payment
If you’re not comfortable cosigning for their house loan, then you might want to consider helping them with their down payment instead. It’s really going to help them a lot if you assist them with paying their down payment. Most lenders would usually require the borrowers to pay at least 20 percent of the house’s principal balance once it gets approved. So if in case they have a $200,000 mortgage loan, they would have to pay $40,000 for just the down payment alone. This is quite a hefty amount, especially if their only source of income is their pension.
However, there are other options that you can choose from if in case you can’t afford to pay the 20 percent down payment. You may avail the FHA loans available in selected mortgage companies in states like Utah, or get the PMI instead. However, you’d be paying more for these options in the long run. Also, PMI solely insures the lenders alone if in case your loan goes by default. So if you have the budget to pay the 20 percent down payment, then that would be greatly advisable instead of choosing other alternative options. You might want to ask some real estate agents located in cities like Salt Lake City to know more about the options that you can choose from.<< Back to the list.
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