Some of the guidelines on getting a mortgage these days is just CRAZY.
Exhibit A) I have a client with a great credit score. He has 1 Visa card with a very low balance. In fact he pays it off every month. His car; paid for. No student loans and he has a decent savings.
The problem; he doesn’t have enough lines of credit to get a conventional mortgage. He can go FHA; but why – he is putting down OVER 20% ! FHA is usually for those folks who only have the minimum 3.5% down payment.
So in walks his father. His father will co-sign the loan with him.
Exhibit B) Dad – great income. Substantial savings and investments. Two credit cards. All paid down to almost nothing and paid off every month. Very high credit score. House – paid off. Cars – paid off. Basically zero debt.
Not enough credit lines to qualify for a conventional mortgage. They must go FHA and pay FHA fees.
It seems the fact that they do not have enough credit likes Hurts them to a point where they cannot get a conventional loan. Rules are important; and I suppose are in place to protect banks and the economy. 5 years ago my dog could have gotten a mortgage; but now it’s harder and harder.
So get this:
Dad was so annoyed; he decided to just pay CASH for the house and have his son pay him back.
Yes; thats right. The man couldn’t get a loan for the house without thousands of dollars of fees because he “didnt have enough credit”; so he paid cash.
Now really – does this make any sense?