Helping Your Kids Buy a House in NC

Now that the Economy has improved, more kids are graduating from college and getting jobs… many of our friends are ready to help their kids buy a house in NC!  “Get My Kid Out Of My House!” is more than just a fervent wish – parents are ready to HELP their children buy their first home, and there are many options available to them!

Renting is more expensive than a mortgage payment for most folks.  We just did a comparison over the weekend for our son.  He has a nice 3 bedroom home with a full unfinished basement.  He pays $1150 a month for this single family home.  If he BOUGHT a $150,000 house – his TOTAL mortgage payment would be $737.  Money is cheap, home prices are cheap – now is the time to encourage your kids to buy their first home!

Helping Your Kids Buy a House in NC

Here are a few things you and your kids need to know about buying a house:

• Credit:  If you have a child in College – over the age of 18 or 20, help them get a credit card.  A Secured Card will help them “build” a score, and having the card over time means that when they are ready to buy a car or a house, they will be able to do it – without YOU!  If you get an offer for them in the mail for a credit card – READ the fine print.  Often those fees are higher than just getting a secured card.  Adding them to YOUR card as an Authorized user is not as good as establishing it in their name.  They need a credit score of at least 620, and this takes TIME.
• Minimum Credit Scores:  If you children have had some rough times, and they are now back on their feet, remember that there are some mandatory waiting periods for buying a home after Bankruptcy, Short Sales and Foreclosures. Simply being a co-signor on a mortgage loan – if the other person has credit that doesn’t meet the minimum score requirements (generally 620) won’t help.  Your good credit will not be enough to off set a score under 620.
• Urban Legends About Credit Scores:  Don’t listen to those Urban Legends that say you can dispute all of the bad stuff and get items taken off your credit report for $199.  I’ve seen the signs in Johnston County too – it’s not true.  Don’t get sucked in!
• Co-Signor:  If INCOME is the issue, not credit, then you CAN co-sign for a loan with a child.  This is really great home loan program for single parents, who need some interim help!  It’s also a great program for Graduate students who can’t imagine studying AND living in a College Apartment one more year!  The FHA Non-Occupying Co-Borrower program allows for a minimum down payment of 3.5% – but again, the person who is going to live in the house needs a minimum credit score of 620.
• Student Loans:  We are seeing more and more kids with 3 and 4 times their annual salary in Student Loans.  This can be tough, and might be another reason they would require a co-signor. USDA makes us count, in some cases, $100 a month per loan… even if the payments are only $22 a month!
• No Money For Down payment:  Often times the stumbling block to home ownership is C-A-S-H!  A recent survey showed that more than 1/3 of the first time home buyers looking for a house listed “not enough money” as the reason they were not buying.  There are TONS of No Money Down Home Loans available- but in general, the kids are going to need $2500 to $3000 to move, pay their share of closing costs, get utilities cut on.
  • Gifts from Parents: The kids can get a gift of the entire amount from family and friends, they can even use a BRIDAL REGISTRY to show who gave you the individual amounts! If you are giving a Gift – please know that there’s extra paperwork involved… if you don’t want to give us the paperwork (invasion of privacy?) then the kids will not be buying their dream home.  We hate to “over document” a file, we believe your good intentions, but Fraud is rampant, and this is the way the system works now… underwriters are STRICT on gift funds!
  • Loans For Down payment: It’s important to know that you can give your kids a GIFT of CASH to use – but you can’t LOAN them the cash for the down payment and closing costs.
  • 3% DPA From NC To Buy a House:  For first time home buyers who qualify for it, the State of NC offers 3% in the form of a forgivable loan to help buy a house.  It comes in the form of a 2nd mortgage, that has no payments due for 30 years – you no longer have any reserve requirements, so you don’t have to have ANY cash to use this program.
  • 5% No Repayment Loans that can cover closing costs and down payment!
  • $15000 Down Payment Assistance available in every county!
  • USDA Home Loans:  These loans are available in every county in NC, and have NO DOWN PAYMENT.  Sellers will often pay the closing costs – so it really is a cheap way to get into a house if the kids meet the 640 credit requirements, are below the maximum income limits, and buy within the USDA Home Loan Footprint.
  • Sell you kid one of your Investment Properties!  Yes, you can sell a child one of your Investment properties.  There are some extra rules, specifically, they have to rent the home for 6 months before you sell it to them.

Remember when you bought your first house?  Our Mortgage Rate on our first house was 13.75%!  These days, mortgage interest rates are 10% lower!  It’s time… kick the kids from the nest, and help your kids buy a house in NC!

Call Steve and Eleanor Thorne 919 649 5058, we’re parents, we’ve been in this business forEVER, and we want to help your kids buy a house in NC!