Posted by Kiersten on July 17, 2001 at 20:11:42:
You could (and probably should) follow standard mortgage guidelines to ensure they can refinance without issue in the future. Get their credit. Obviously, they would get their own financing if they could so expect some issues but determine why the issues occurred and if they are fixable within the time frame you want before they need to refi. Meaning, if they have a child support lein of $15,000 and you can see from their cash flow that they can’t pay this off, move on. But, if they had a repo last year and owe 3K but have good credit on their credit cards and a student loan, perhaps they can pay the past debt and continue to build on the good credit and be fine in two years. Also look into their income and their expected income by the time they want to refi (assume 6% raise if that’s their average in the past, for instance) and see if their ratios are in line. Ask for a bank statement to see if they have good cash flow–no bounced checks and perhaps a few hundred in the bank. Don’t expect a lot as FHA doesn’t but these few things (decent credit, ratios in line and positive cash flow though not necessarily extra cash!!!) are necessary for them to refi.