When I was trying to secure a mortgage, I was originally told by a loan officer that it wasn’t possible – that it would be too complicated. But I had done my research and knew this wasn’t the case. Once I started working with The Moreira Team, I could tell they were trying much harder to find a solution. They’re also real people with compassion. I mean, they even talked to my mom and made sure she was taken care of. You don’t get that kind of service very often.
The Client
- Loan Type – Purchase
- Program – FHA Loan
- Loan Amount – $312,750
- Rate – 6.375% 30 Yr Fixed
- Down Payment – 3.5%
Background
During the Covid lockdown, Alex cosigned on an FHA mortgage with his mother. They lived together during the pandemic and his mother was making the mortgage payments. When Alex received a job offer in Atlanta, he had to relocate.
Once in Georgia, Alex decided to purchase a condo and wanted to take out another mortgage under the FHA program to take advantage of the flexible loan requirements and attractive terms. However, specific rules for FHA mortgages made it hard for Alex to qualify. Although his mother was comfortably making payments on the loan in Florida, the fact that he had cosigned on her mortgage proved troublesome.
Client Requirements
Our client Alex E. came to us looking for a mortgage so he could purchase a condo in the Atlanta area. However, there was a catch. He was seeking a loan under the FHA program as a first time home buyer but had cosigned on a separate FHA loan for another property several years ago. This presented a problem.
- A person can only qualify for a second FHA loan if the two properties are at least 100 miles apart.
- Being the cosigner on one loan can hurt the applicant’s debt-to-income ratio.
- Co-signers of mortgage loans share equal repaying responsibility with the primary owner.
- Borrowers must be current on their existing FHA mortgage before applying for a second one.
It was easy to prove that the condo Alex wanted to buy was more than 100 miles from his mother’s home in Florida. But his debt-to-income ratio was too high due to the first mortgage.
FHA Loan Challenges
Typically, a loan under the FHA program is easier for home buyers to qualify for than conventional mortgages. Credit score, debt-to-income ratio, and down payment requirements are lower, which is why they’re attractive to a first time home buyer like Alex.
However, with an existing mortgage in his name, he faced challenges buyers with straightforward applications don’t have to worry about.
Our Solution
Alex understood the benefits of getting an FHA loan but wasn’t sure how his existing mortgage would affect his chances of qualifying. He decided that navigating the process on his own was too challenging.
The first lender Alex spoke to told him that getting approved for a new mortgage was impossible. But he had done his research and knew that there was a creative way to get the loan he wanted. He just needed someone willing to take a closer look at his options.
When he came to The Moreira Team, we knew right away that the mortgage he cosigned on in Florida would increase his debt-to-income ratio and prevent him from qualifying. This was a tricky situation for Alex, as he had cosigned on the first loan to help boost his mother’s chance of qualifying. However, he wasn’t the one making payments on the loan.
To get around this, we had to prove that Alex’s mother was the only person making the mortgage payments on the home in Florida. Our team worked with Alex to acquire twelve months’ worth of statements showing that his mother was paying the mortgage from an account he wasn’t associated with. Communication was key during this process, and working one-on-one with Alex and his mother paid off.
Once we proved he wasn’t making payments on the home in Florida, we no longer had to factor a mortgage into Alex’s debt-to-income ratio. This allowed him to meet the qualifications for the loan.
“Working with as many clients as possible to maximize income isn’t part of our mission. We’re more concerned with providing personalized service that gets results. For us, it’s all about finding life-changing solutions for people, and we use a forward-thinking mindset to achieve this.” — The Moreira Team
The Results
By proving that Alex wasn’t responsible for making payments on the mortgage he cosigned for, he was able to purchase the condo in Georgia. Plus, a new mortgage under the FHA program allowed him to take advantage of other benefits.
- He only had to make a down payment of 3.5% of the sales price.
- He enjoyed a lower interest rate and mortgage insurance premium on the second loan.
- He was able to remain on his mother’s mortgage for the home in Florida.
- Because he remained a cosigner on his mother’s mortgage, she avoided having to refinance her home with a higher rate.
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The Moreira Difference
Providing personalized service for people in situations like Alex is what sets us apart from other lenders. This type of hands-on approach is something big banks simply can’t provide.
We also have the experience to think outside the box. This means we’re never going to tell our clients they can’t qualify for the loan they’re after before looking at it from every angle.
Finally, we understand the challenges people face when buying a home and want to help. Our team makes it a point to put communication front and center during the loan application process so our clients understand every step. It’s our goal to find the best mortgage solution for every situation and ensure the client feels confident they’re in good hands.
Find a Mortgage Solution That Fits Your Needs
Whether you’re looking for a loan under the FHA program like Alex or aren’t sure what type of mortgage is right for you, The Moreira Team can help. We understand the challenges home buyers face and will do whatever we can to find a solution.
Get your custom rate quote today.