Q: “We are trying to get a house, first time, but my husband can’t contribute to the process because he is has no job yet. Based on my income alone (lots of school loans), I was approved for $150,000 loan, we need a bit more. My brother is willing to be co-borrower, but he gives us a condition that in at most a year, he wants to be taken off the loan, title, deed. 1) Is this worth agreeing upon; honestly we can afford to pay the mortgage, 2) is it possible to get him off the loan within a year, and 3) will this affect his credit history negatively if we can get him off?”
A: All good questions. 1) You honestly can afford the mortgage, great, but you still need to meet the qualification standards. If your income alone is not enough for a higher loan, and you feel you must buy a house now, then a co-borrower is one answer. You must decide the importance of timing. 2) Generally, the only way to release a borrower from being obligated on a loan is by a refinance. One of the few exceptions to this method would be if you obtained your mortgage from a lender that puts that loan in its portfolio and does not sell it in the secondary market. However, even then, the answer is not assured. Rules change in lending very frequently;one year can make a big difference. 3) It will not affect his credit negatively unless payments are not made on time, but it may affect his qualifying for other debt because it will show as an obligation on his part.
As always, I recommend you find a good mortgage advisor to discuss your entire situation and possible solutions. For example, are any of your student loans on a deferred payment basis? If so, look into FHA financing where, under particular circumstances, they do not have to be used against you in qualifying.
Karen Davis NMLS #245892 is regional vice president of The Mortgage House, Inc. She has over 36 years’ experience in the mortgage banking industry. Your e-mailed questions are welcomed through her website at: www.themortgagehouse.com or call 1-800-305-9731. This article is a forum to explore real estate principles. It is not intended to provide tax, legal, insurance or investment advice and should not be relied upon for any of these purposes.