Michael Holigan: This is for the parents out there who like to help their children get a house. There's basically three different ways. We're going to take a look at each one. First off, is co-signing. Now co-signing, you're not really on the loan, but you're actually putting up a pledge account, helping to guarantee that loan. Second, is co-borrowing. And that's where you make full application and on that one you are on the loan. You go in, you apply at the same time, make sure both of you are in a good mood and the same mood because you have to go through an hour, hour and a half's worth of paperwork and they go through both parties histories, the children's and the parent's. They go through everything. Make sure it all looks good before you can co-borrow together. Last method is gift funds. Now this is allowed. They just need verification. A gift fund is where you give them the money to help with the down payment, the closing costs and the pre-paids. Now the mortgage company needs to see all of that. Don't do it, just sliding it into their account. Make sure that they have all the paperwork on that and find out on the typical mortgage program that you're on how much is allowed. That varies, whether it's VA, Conventional, or FHA. So sit down with your lender, talk about gift funds and how it works and which methods works best for you.
Episode 021 1995 - 96 Season
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