The Family Opportunity Mortgage is a useful option for caring family members who want to purchase a home for a loved one.
Allowing you to purchase a home for a family member while enjoying better terms than investment loans, this program can help you achieve peace of mind by providing comfortable housing for your loved ones.
Why the Family Opportunity Mortgage?
The Family Opportunity Mortgage is a very useful loan program intended for caring family members who want to provide a comfortable home for a parent of child. Without this program, most people would have to use investment loans. While useful in their own right, investment loans often come with tighter restrictions, such as higher credit score requirements or larger required downpayments. They may also have higher interest rates.
Why? Because investment loans are inherently more risky to lenders. This is because investors use these loans to purchase a financial asset, not a property to which they have an emotional connection. If you were to lose your income and could only pay one mortgage, the one for your personal home, where your family lives, or the one on your rental property, which would you pay and which would you risk losing? Most people would risk a rental if it meant keeping their family home. The emotional connection is a very real thing in home lending, but it’s not present in investment purchases.
For this reason, lenders compensate for the higher risk with more restrictions and higher interest rates.
A home for a family member may be an investment property in some senses, but it has the same (or similar) emotional attachment as a personal home. You don’t want to lose the home where a child or parent lives, so you are far less likely to let it go into default. The loans on these properties, therefore, should reflect this fact.
Basically, with a Family Opportunity Mortgage, you get similar terms as a loan on a primary home, even though you are purchasing a second home. The difference is that the second home is not for a random tenant, but for a loved one.
Top 4 Uses of the Family Opportunity Mortgage
1. An Elderly Parent
Probably the most common reason to use the Family Opportunity Mortgage, the program allows you to purchase a property for an elderly parent who needs comfortable, safe, affordable housing but does not have the means to qualify for financing on their own. Through this program, you are able to purchase a property where your parent can live using both your own personal income and any available income that your parent has.
Even if a retired or elderly parent is living on retirement-account distributions, Social Security payments, or pension checks, they may not have enough money for a top-quality home. But this program allows you to use your income to help them enjoy a wonderful house during their retirement years.
2. A Disabled Child
This program brings the same basic benefits of buying a property for a parent and applies them to situations where people are buying a home for a disabled child. Many disabled adults, as well as caretakers or family members, receive some sort of assistance from state and federal governments. But these may not be enough for a home that keeps your child comfortable and happy.
Family Opportunity Mortgage, however, can help. To use this loan option for a disabled child, you will need to bring some specific information to the lending agent’s office. To get started, you’ll need proof of the child’s permanent disability, which will help verify that you are eligible for the program. Next, you will need to provide paystubs from the disabled child’s workplace, if the child has a job. Documentation of social security payments will also be required. All of this information will be used to demonstrate that the child cannot qualify for the home loan on their own.
3. A Child in College
You might assume that this program is specifically for people with either an elderly parent or a disabled child who can’t afford a quality home on their own. This is actually not true, as it can be used to purchase a property for a child in college.
College is getting more expensive every year, but it’s not just tuition. The basic cost of living, especially in dorms or a rental in a major college town, can be astronomical. That’s why many parents, instead of paying rent for four or five years, choose to purchase a home for their child. They avoid paying rent, which never sees a return, and purchase a reliable house for their child, a house that will likely (but not certainly) go up in value.
But for many parents, this means taking out an investment loan, which can have tighter requirement and higher interest rates. It’s far better to use the Family Opportunity Mortgage.
To qualify for the Family Opportunity Mortgage, the child must be enrolled in college and the property must be a reasonable distance from the school. The child will not be an applicant, and their income, credit profile, and other factors do not come into play during qualification.
4. Any of the Above, Plus You Want an Investment Property Someday
In all of the above situations, it’s likely that someday the property will no longer be needed by your family. Your elderly parent may eventually need advanced care, and a disabled child may need to live in housing closer to work or therapy. Eventually your child will graduate from college. (We hope!) This will inevitably leave you with a property that you own, but is not needed by anyone in the family.
Therefore, it’s best to use this program if you like the idea of possibly becoming a landlord in the future. Owning income-generating property can be financially rewarding, and it could be the key to your strong financial future. But it requires work, and inherently has higher risk levels than other forms of investments.
Of course, you can always sell the property, but if you like the idea of someday having investment property as part of your portfolio, the Family Opportunity Mortgage may be the perfect choice.
Is the Family Opportunity Mortgage Right for You?
Want to learn more about the benefits of the Family Opportunity Mortgage? Contact our staff today and we’ll show you all the advantages of this useful program. From aging parents to kids in college, this loan option can help you take care of your family while providing safe, clean, affordable housing!
At San Diego Purchase Loans, we can help accelerate your purchase with the FastTrack program. This is a useful option for people who want an efficient purchase, so contact us now to learn about FastTrack financing!