Let me tell you how my broker 
was able to purchase homes for both of her kids to go to college. It is one of those insider secrets that feels like it should be illegal, but it’s not! I learned about it from a loan officer whose daughter I helped find a home to live in while she attended FSU. She ended up paying less to move in than I had when I RENTED an apartment when I moved here years earlier. It felt like an episode of Rich Mom, Poor Mom. Here’s what they knew that I didn’t and how as a Tallahassee Realtor, I can help you save thousands of dollars on housing costs.
A quick search through the apartments near the university shows that rents are increasing again. Most of the apartment rentals are between $700 and $1200 a month. This is for a single bedroom and most share a communal living room and kitchen. Wow. That’s a lot of money to give away each month with nothing in return long-term.
First Time Home Buyers and/or Student Buyers
The Federal Housing Administration has several programs out there for first-time homebuyers including a program for co-borrowing with a qualified relative. The co-borrower must be related to the primary borrower. These are great programs for students attending FSU or for first-time homebuyers who need a fresh start. Not all loan officers are familiar with them, but they are common in Tallahassee. Your Tallahassee Realtor will have local recommendations for lenders to use for these loans.
In 2016, I helped a young lady purchase her first home with an FHA loan so she would have a place to live while she attended FSU. She had looked at many apartment complexes, but she had an elderly dog and a cat she wanted to bring with her. The apartment managers did not allow many pets. We found a cute place on a quiet street with a fenced backyard that was a 10-minute drive to FSU. She paid $80,000 and closing costs including the loan down payment were less than $1,700. She’s thinking about listing that house this year for just under $170,000. That’s more than double what she paid for it!! Needless to say, she is thrilled that her first home has increased so much in value.
Last summer, Ms. AJ found a two-bedroom two-bath townhouse within walking distance of the mall, restaurants, shopping, and multiple bus routes. She used a down payment assistance program and while her closing costs were close to $10,000 for her $138,000 home loan, her cash to close was a little over $800. Her monthly mortgage payment is less than $900 a month. She has the whole place to herself, but she could easily rent a room and help lower her monthly cost.
FHA203B Program for Non-Occupying Co-Borrower
My broker, Patti Ketcham, has used an FHA203B non-occupying co-borrower loan for two of her kids. These loans can be used for a single-family home, a townhouse, or a condominium. The loan limit for Leon County is $356,362. The primary and co-borrower must be relatives, but that can mean a sister, grandchild, or even your mother-in-law.
The primary borrower does not have to have an income, and this is helpful if you have a child moving to Tallahassee who hasn’t found employment. The income and debt for both the borrower and the co-borrower are put together and debt to income ratios are calculated together. Both borrowers must have good credit.
These loans require a minimum of 3.5% down and the person living in the home can claim homestead to lower their property tax obligations. This does not impact the co-borrower’s homestead exemption.
By the time you pay the security deposits and first and last month’s rent, you have close to the amount you need to purchase a home. Then, in several years when the kids are ready to leave FSU behind, you can sell and make a profit.
Downsides…
The downside is that the co-borrower has this debt on their credit report. HOWEVER, if you provide 12 months of canceled checks (front and back) from the primary borrower, you can have the lender not count that mortgage in your debt ratio should you want to borrow mortgage money in the future.
The biggest challenge I have seen for these homes is inventory. I’ve helped several families find housing options that work best for them and you need a Tallahassee Realtor ready to jump in and work hard for you!
Click here for a free copy of my book: How to Buy a Home: Tips, Tricks, and Pitfalls to Avoid When Buying a Home in Tallahassee.
For information about other home loans available for Tallahassee check out this blog article: Home Loan Options in Tallahassee
