The Family Opportunity Mortgage Refinance

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I’ve written about the Family Opportunity Mortgage for purchases where certain circumstances allow one to obtain a mortgage for a family member who is either a student in college, a disabled adult child or an elderly parent. The Family Opportunity Mortgages allows financing to be treated as a primary residence instead of an investment property as long as the scenario meets certain guidelines.  The Family Opportunity Mortgage is a Fannie Mae/Freddie Mac program that is also available for refi’s!

I’m currently working with a client who wants to refinance a home she owns that her elderly parents are living in. The Family Opportunity Mortgage allows for her parents to be able to live nearby and not have to meet the requirements of a second home (typically a minimum of 50 miles away from your current residence) or the higher interest rate and cost associated with an investment property.

Here are some of the requirements for the Family Opportunity Mortgage when an adult child is refinancing (or buying) a primary residence for an elderly parent:

  • Elderly parents must be unable to work or have insufficient income to qualify for the mortgage;
  • The parent must occupy the property as their primary residence;
  • The adult child may own their own primary residence;
  • Only “rate term” refinances are allowed. Cash-out or paying off non-purchase money second mortgages/HELOCs are not allowed;
  • Parent may be on the mortgage or the deed but is not required to be;
  • A written letter of explanation will be required from the adult child addressing the parents limited finances and intent with the home.

As of the publishing of this post, I’m quoting 3.625% for a 30 year fixed Family Opportunity Mortgage refinance (apr 3.717) based on 720+ credit scores.  The $250,000 loan amount will have a principal and interest payment of $1,140.13 which will drop my client’s mortgage payment by $400 a month!

NOTE: The quote above is as of August 14, 2012; for a current rate quote for your home located anywhere in Washington state, please click here.

We are pleased to be offering the Family Opportunity Mortgage at Mortgage Master Service Corporation. If you would like a mortgage rate quote for a refinance or purchase on a home located anywhere in Washington, click here.

Comments

  1. Susan Binn says:

    Rhonda, We’re researching this type of loan now but are being told the parent has to provide tax returns and be on the mortgage and the deed. Your thoughts?

    • The program does not require the elderly parent to provide income or credit documentation. The elderly parent does not have to be on the mortgage or deed either. With Family Opportunity, you (the child) will need to write a letter explaining your parents financial situation.

      It sounds like the lender may not be using “Family Opportunity” and instead, is trying to approve your loan with you as “co-signers” for your parents. In that case, your parents would need to qualify and provide the documentation that is being requested.

      • Susan Binn says:

        Rhonda, thanks, I appreciate your input. What’s the best way to find a lender (in AZ) that will do this type of loan? Having a hard time finding someone…..

  2. Vincent Luis says:

    Thank you so much for your article, Rhonda. How can I get more information on this Family Opportunity program? I have scoured the Internet but primary and authoratative sources are hard to come by. Thanks!

  3. Hello, Rhonda

    I was thinking about helping my father refinancing his house with me being a co signer. With our combine income will that help get approved since alone my father is not

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