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Columns: Dr. Don
Don Taylor, Ph.D., CFA, CFP   Expert: Don Taylor, Ph.D., CFA, CFP
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Refinancing for two homes can be tough
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Refinancing parents' home in your name

Dear Dr. Don,
Can I refinance my parents' home in my name for them and still get financed for my own? Thanks.
-- Cory Credit

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Dear Cory,
It's possible. You'll have to have enough income and the credit score to carry both mortgages. Co-signing a mortgage loan with your parents will result in the same credit issues as refinancing their home solely in your name, so you can't finesse the issue by co-signing the loan.

You haven't told me how big the refinancing would be, or what size mortgage you're looking to finance for your personal residence, but lenders typically won't underwrite a loan when your total loan payments are more than 36 percent to 40 percent of your monthly gross income. 

The Bankrate calculator, "How much house can you afford?" will give you an idea as to how much of a mortgage you can afford on your income if you were financing your parents' home too.

There are other issues to consider as well. The lender has a security interest in the property. The borrower is typically the owner of the property. Your parents giving a lender a security interest in their home to secure your loan is likely to be an obstacle in the financing, even if you're doing it to help them out. Without applying for a loan, talk to a lender in your area to ask how it's done in your state or consult with a real estate attorney.

Take a step back and ask yourself what you're trying to accomplish in refinancing your parents' home in your name.  You may be able to figure out a different solution than refinancing the home in your name.

Bankrate.com's corrections policy-- Posted: July 13, 2007
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