what is a reasonable interest rate for a home loan for people with no credit, w/ a cosigner w/ great credit?
me and my husband are wanting to buy our first home, neither of us have credit, his parents have great credit and are willing to cosign the loan, we just wanna know what is a REASONABLE interest rate.
- 1 decade agoFavorite Answer
The interest rate is not only based on credit score, of course is a very important factor. But the lender will also look at debt to income ratio as well as the loan to value, and other factors that in your particularly case, don't apply to you. I am assuming that his folks have had credit established for a long time, so you should be able to get a good rate. Specially if you are getting an adjustable rate mortgage. If you are concern about payments being too high, you can ask for a 2/28. The payment will be fixed for two years, and adjustable 28. With a 2 year prepay. Now in 2 years, your credit score will be great as long as you don't default on the loan. Then you will have to refinance to go into a possible fix, if you plan to stay in the house for a long period of time, and also so you can get your in-laws out of the loan and title. Fixed rates are higher than arms (.50%-.75%). A little bit over two months ago, I had a customer with great credit score 720+, we did the loan full doc, and I got him an interest rate, of believe it or not, 5.75% fixed for 30 years! Now I am not saying that is what you are going to get, but you should be able to get a good interest rate, specially if you are putting money down, and you can prove enough income.
- AnnaLv 44 years ago
Having your parents buy the home as a "second home" and you paying them rent for two years is also FRAUD. That was a bad idea. With a co-signer (non-occupant co-borrower, in mortgage lingo), the easiest and best financing is from the Federal Housing Administration (FHA). FHA loans are issued by banks and brokers, and you pay mortgage insurance to FHA. FHA in turn guarantees your loan to the issuing bank, so they have an incentive to lend you more money at a higher loan-to-value and lower rate than they otherwise would be able to. An FHA loan right now would be in the 6.0-6.5% range for a 30 year fixed rate. DO NOT take a 2/28. That's a subprime loan, and there's no reason you should have to take a 2 year subprime ARM. In fact, you should avoid anyone who suggests one.
- 1 decade ago
call a mortgage broker in your area, or a bank. Tell them your situation. Chances his folks are well established, so you should not have a problem
They could purchase it in their name and let you pay the mortgage for a year then transfer everything into you names,or they co-sign. there is a lot of creative financing available
- chazzerLv 51 decade ago
Hopefully around 8% or less...