How Multiple Home Loans Impact Mortgage Rates?

Posted by  on Oct 08, 2009

Q: I want to purchase a home that my son can live in while he attends college on the other side of the state. Are there limits to the number of mortgages I can maintain, and will multiple home loans on my credit report affect my mortgage rates?

A curious trend has swept college towns across the country, and it sounds like you want to be a part of it. With exurban home prices remaining relatively flat compared to urban and suburban areas, some parents have discovered that the right mortgage quote can make home ownership cheaper than off-campus rent. However, non-primary residences are subject to tighter underwriting guidelines and may require larger down payments and higher rates.

There may be a limit to the number of properties you can finance if you borrow conventionally. Mortgage giant Fannie Mae's policy allows "investor and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements..."

One program you should consider is FHA's "Kiddie Condo" program. You buy the property but put your child on the loan as well. The loan allows non-occupant co-borrowers (you). Parents can purchase a condo with their credit; only the co-borrower (your child) is required to live in the unit. It is not considered a second home or an investment property and you can put up a very low down payment should you choose to do so.v In addition, it allows your student to acquire a credit rating and home as well as a degree.


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