[Shannon]

We are looking to buy a house for our college kids who are at the same university. The roommates would be able to help cover the mortgage.

Buying the house is not the discussion. Our question is in putting the home in one of our kid’s names w us as cosignors.

After undergrad, our kid would need to secure loans for grad school.

Would the mortgage play into their ability to secure grad loans? Other things positive or negative to consider with this scenario?

Thank you for helpful feedback.

[Emma]

To answer question about grad school, I owned a home while in grad school and it was not a factor

But to clarify, I mostly paid out of pocket along with my employer benefits because it’s rare to receive aid in grad school

You’d have to look at the requirements for financial aid to determine if this will be a factor

My employer paid $8k a year, I divided my courses to overlap 2 years so I could get the max $16k and paid $2k out of pocket. No loans or aid

[Kevin]

When you say ‘put it in their name’ are you asking about the mortgage or the deed?
If the mortgage, that may impact financing for anything they may acquire.

If the deed, that shouldn’t affect them with financing but in terms of death benefits, it would benefit them to have the property in your name(s) and upon death they get a step up basis.

Only a consideration if you plan to hold it long term.

[Shannon]

Typically the taxes and insurance (and HOA) costs are counted against someone on the deed for mortgage (and sometimes other loan) qualification.

So, if they needed another, different house it would impact their max qualifying ability.

If they are also a co-signer on the loan then they also have the loan debt counted against them unless they can prove someone else has paid that cost for 12 months (with documentation like cancelled checks or ACH) – this varies to some extent based on the loan program.

If they will have a higher debt to income ratio when heading into grad school (which is typical since they’re usually not earning much) this would likely impact qualifying for “normal loans” such as cars or personal loans or mortgages.

I’m a bit out of the game on school loans but last I was hip to them, there were essentially no qualifications. Especially with a co-signer. This can be problematic.

Some other things to consider include: if you intend to maintain it as a rental property after they leave, all owners are required for any actions such as refinances or solar panel loans, etc.

If they’ll be very busy – you may want to consider that since it may be tough to get them in front of a notary.

Additionally if they’re ready to move on and their friends aren’t – it’s a small possibility (but one worth considering) what happens if an eviction is needed (or perhaps more realistically: if damage to the home occurs from the roommate, jointly with the child, or from the child only)

I’d recommend a clear conversation on that with follow up docs in the way of a lease.

[Julie]

They could be losing out on first time home buyer credit later on.

[Author]

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