As for most parents when the time comes to see their children off to college can be a sad sight, not only emotionally but financially as well. Now I can’t help with the emotions involved but financially speaking parents now have the opportunity to turn this financially draining life event into a great investment opportunity while teaching their newly graduated children responsibility. With our current market conditions being the way they are parents can purchase a condo for their kids to reside in while they attend college for less than you would pay college dormitory housing or renting an apartment. Not only will their be extra tax deductions over the next four years once the students time is up in school you can sell the property and turn a great profit. Rates are still at an all time low so the banks are practically giving away the money. Check out these examples of rent vs. mortgage.
Typical two bedroom two bath rental in Wilmington-$750-850/month. Monthly Principle, Interest, Tax and Insurance on a two bedroom two bath condo purchased for $70,000.00 at a fixed rate of 4%-$550.00. Quite the difference, not to mention a roommate could cover most of those costs renting the second bedroom.
If you have the equity you could pull out of your homes to pay for a condo that is definitely a great way to go about it, but if you don’t FHA has a program out there for this very thing it’s called the FHA Kiddie Condo Loan Program, here is some information and guidelines for it:
FHA Kiddie Condo Loan Program-
This program is offered through FHA and it’s purpose it to assist young adults with the help of their parents to purchase real estate for the first time that don’t have any credit or income to back up a loan. The way the loan works is both the parent and their child apply for the loan, the approval is based mostly on the parents income and debt ratios helping the child to get approved. Some advantages of this loan are you re only required to put 3% down, most lenders this day in age require 20% on investment property purchases (which essentially this is), same goes for the rate typical investment loan rates are much higher but with this program the lowest rate offered to first time home buyers (given you have good credit) is the rate they will lock down for you. This program also helps the young adult attending college to learn about mortgages and it will establish credit for them so when the time comes for them to purchase a home after college they will already have a great mortgage history. Just like with any loan the tax benefits are the same, you can deduct the interest points and even split it up between parents and child this helps parents with a higher incomes to offset some of their tax debt. For more info go to:
http://www.mortgage101.com/article/fha-kiddie-condo-loans-first-homes-young-adults
All in all this is something worth looking into if you have a child getting prepared for college in the near futures.
For more information contact BlueCoast agent Carly Gravely at 910-228-4333