If you have elderly parents, it is common to worry about their living situation as they get older. You want them near you so that you can visit as well as to keep you close should an emergency arise. Nursing homes or assisted living can be very expensive and not where your parents want to be, yet purchasing a home is out of the question for their current financial situation. You do not have to worry that your parents’ only option is to take over the lower level of your home – Fannie Mae offers a program that allows you to purchase a home for your parents and consider it owner occupied. This means a great many benefits for you and your parents.
Affordable Down Payment
If you are purchasing a home other than the one you live in, it is typically considered an investment property or vacation home. Whatever it is called, the bottom line is that you will be required to put a significant amount of money down on the home – typically between 20 and 30%. That’s a hefty amount on a home that you are not going to be residing in! If you were looking at a $200,000 home, that is $40,000 – $60,000! With Fannie Mae’s Family Opportunity Mortgage, you can call the home you are purchasing for your elderly parents owner occupied, which means as little as 5% down. In the previous example that means just $10,000, which is quite a difference!
Investment properties or 2nd homes always come with a higher interest rate. This rate is typically half a percentage rate higher than owner occupied properties. This is because there is a higher level of risk on investment properties versus owner occupied. You are more likely to default on these loans than on the home that you live in full-time. The Fannie Mae Family Opportunity Mortgage enables you to take advantage of those lower owner occupied rates, however, making it even more affordable to purchase your parents a home.
Qualifying for the Family Opportunity Mortgage
In order to qualify for this Fannie Mae mortgage, you will have to supply many of the same documents you did for the purchase of your owner occupied home. You will need to show your pay-stubs, W-2s, bank statements, verify your employment, and have your credit report analyzed. In addition, however, you will need to provide proof that your parents are your parents, provide their pay-stubs if they still work, and proof of their social security or pension income. The documents you are providing from your parents are simply to prove to the lender that your parents would be unable to purchase the home on their own, which is why you are asking for the relief of this Fannie Mae program.
Benefits of this Program
There are many reasons that children purchase homes for their parents. The most obvious is that their parents do not want to spend their elderly years in a home; they want to live on their own. The other reasons include the ability to have your parents nearby (there is no distance clause as there would be with an investment property or 2nd home). In addition, it could be less expensive to purchase your parents a home rather than placing them in assisted living. Even if they need medical assistance, you can hire a nurse or service to come to their home to help them as needed. The benefits of the Fannie Mae program are numerous and benefit both you and your parents in the end!Click to See the Latest Mortgage Rates»