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Chad Smith Asked:

My wife and I will finish school in May and then plan to move back to the area where we grew up. We would like to buy a home as soon as we return to the area. The problem is that even if we are fortunate enough to find jobs, we have been told there will be a few hang ups. Apparently the best case scenario (assuming employment) is that we could get into a home a month or so after being back when are able to prove employment/income level with a paystub. We have also been told that a possible situation is that we will be on probation with our new jobs. Because we have to disclose this to the lending agency, this will prevent us from getting a loan until the probabtionary period ends. The loophole to all of this, as I am told, is to use our parents as cosigners, which they are willing to do. Additional information: All parties have good to excellent credit scores and there would be a down payment of at least 10% So the questions are: if we use our parents as cosigners can they come off the loan/title without us having to refinance? If no, will the cost to refinance be such that we are better waiting 4-6 months after returning when we can buy the home on our on, keeping in mind we have to pay rent on a place till then. If we use a cosigner will that prevent us from getting our lowest possible interest rate? If we use a cosigner and disclose to the lender that we plan to remove the cosigner as soon as we can will that prevent us from getting our lowest possible rate. Additional information: All parties have good to excellent credit scores and a down payment of at least 10% [Bloomington IL]



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Answer Provided by: Dave McCune [01/18/2009]

Hi Chad, As long as you and your wife have jobs you willl not have a problem getting a mortgage provided you qualify based on your salary. There is no time frame you must be on the job to qualify for a mortgage if you provide proof that you just graduated from school. If the income you make is not sufficient to qualify for a loan your parents can co-sign. Your parents can be removed from title after you close on the loan but they must remain on the mortgage. The only way to remove them from the mortgage is for you to refinance. The typical cost of a refinance is $1800 so that should not stop you from refinancing. The situation that may stop you from refinancing is having to take a higher interest rate if that was the case at the time you decided to refinance. Also, using a co-signer does not affect the interest rate even if the lender knows that you plan to refinance and remove the co-signer in the future. It is a great time to buy especially if you are a first-time buyer. One more thing you may not be aware of is the goverment is giving a tax credit of $7,500 to first time buyers. If you have any other questions feel free to call me at 847-990-7900 -Dave McCune.