Tallahassee Real Estate

Save A Bundle On College Expenses

FHA "KIDDIE CONDO" PACKAGE

Housing expenses around college campuses have gotten to be outrageous. Some smart parents and students, however, have found a way to take advantage of the high rents that these areas command. The federal government, through HUD, has what is commonly known as the FHA “Kiddie Condo” loan program. This is a standard co-borrower type loan. The program enables the student and a family member or someone with whom they have a long-standing relationship with to get an FHA loan, which only requires approx 3% down. Savvy parents and students are buying two or three bedroom properties, having the student occupy one bedroom and are renting the other bedroom(s). The tenants pay their pro-rated share of utilities. HUD Info

The result of this plan is that families have been able to reduce their college housing costs rather substantially. Student owners are living much more cheaply than they would as tenants.

There are some additional benefits, too. As half owners the parents’ share is treated for tax purposes as investment property, creating some parental tax shelter. In addition, property in Tallahassee has generally appreciated in value. This, hopefully, locks in a profit when the property is sold.

I have helped many smart families take advantage of this wonderful program. I will be happy to sit down with you (no obligation, of course) to explain the program in greater detail. College costs are soaring—why spend more than you need to?

FHA requires that all parties (student & family member) complete a full loan application. Joint assets and liabilities and credit are used in determining loan approval. In addition to the normal requirements, FHA requires that the student provides proof of registration in a local school (i.e. Student ID or transcript.)

**There are many Condo areas in Tallahassee. If you would prefer to purchase a Condo, please note that not all Condo complexes allow FHA financing. Those Condos not on the approved list, would require another type loan (ie Conventional).

**Please refer to this link to confirm a complex is approved for FHA financing: FHA Approved Condos in Tallahassee

**PLEASE BE SURE TO CHECK OUT THE CITY OF TALLAHASSEE LINK FOR THE ROOMING HOUSE ORDINANCE Enacted 2000/2001: Tallahassee Rooming House Ordinance

TYPICAL "KIDDIE CONDO" BENEFITS

ASSUME: PURCHASE OF THREE BEDROOM HOME OR TOWNHOME FOR $150,000 WITH FHA “KIDDIE CONDO” LOAN.

$150,000.00 Purchase Price
$4,500.00 Down Payment (3%)
$147,683.00 Mortgage amount (including mortgage insurance)
$862.00 Mortgage payment at 5.75%
$301.00 Property taxes, hazard ins. & mortgage ins.
$1,164.00 Total Payment PITI
$900.00 Rent two bedrooms at $450.00 each
$264.00 MONTHLY COST FOR YOU

ADDITIONAL BENEFITS

THE PARENT CAN WRITE OFF THESE EXPENSES *

$1,100.00 Property Taxes
$4,246.00 Mortgage Interest
$2,727.00 Depreciation
$350.00 Hazard Insurance
$200.00 Maintenance
$750.00 Property management fee to student
$9,373.00 Parental tax deductions/year
$5,400.00 Minus rents collected
$3,973.00 Estimated parental tax deductions per year
At 31% Tax Bracket Parents Save $1,232.00 IN TAX PER YEAR!

* Figures represent one half of total expenses

SUMMARY: Parents would save $2,232.00 per year in rent ($450.00 rent minus $264.00 actual = $186.00 saved x 12 months = $2,232.00) plus $1,232.00 in income tax = $3,464.00 savings per year.

In addition, the property is appreciating in value and the tenants are paying the mortgage down. Both of these things are building equity for when you sell.

Finally, you know that your student will be living in a good environment and will be learning responsibility.

A “KIDDIE CONDO” purchase is a great way to substantially reduce your college costs.

SAMPLE GOOD FAITH ESTIMATE

“KIDDIE CONDO” LOAN

FHA 30 YEAR FIXED
At a note rate of: 5.75%
At zero points
Sale Price: $150,000.00
Loan Amount: $147,683.00
Base Loan Amt: $145,500.00
Down Payment: $4,500.00

GOOD FAITH ESTIMATE

These estimates are provided pursuant to the Real Estate Settlement Procedures Act of 1974, as amended (RESPA). The fees listed are estimates; the actual charges, rates and points may be more or less. Additional information can be found in the HUD special information booklet, which is to be provided to you by your mortgage broker or lender, the booklet "settlement costs," and if applicable, the consumer handbook on ARM mortgages.

Estimated Closing Costs

$385.00 Appraisal Fee
$18.00 Credit report
$350.00 Document Preparation fee
$100.00 Recording Fee
$300.00 Survey
$1,200.00 Title Insurance
($2,183.00) FHA Mortgage Insurance
$517.00 Document Stamps
$295.00 Intangible Tax
$10.00 Flood Certification
$200.00 Title Endorsements
$225.00 Underwriting Fee
$3,685 TOTAL CLOSING COST

Prepaid Closing Costs

$116.00 5 Days Prepaid Interest
$700.00 1^st Year Hazard Insurance
$175.00 3 Months Hazard Insurance
$550.00 3 Months Taxes
$1,541.00 TOTAL PREPAIDS

Monthly Payments

$862.00 Principle and Interest
$183.00 Taxes
$58.00 Hazard Insurance
$60.00 Mortgage Insurance
$1,164.00 TOTAL MONTHLY PAYMENT

Total Cash At Closing

$9,727.00 *(Down-payment + Est. Closing Costs + Prepaid Closing Cost

*SELLERS WILL SOMETIMES HELP PAY CLOSING COSTS, REDUCING BUYER'S OUT-OF-POCKET EXPENSES*

This information deemed reliable, but not guaranteed

Call Me Today For Additional Information:

Bill Lord
Armor Realty of Tallahassee
(850)893-2525, ext.31 Office
(850)933-6066 Mobile
bill@billlord.com

My Home Tracker
- Save your favorite homes
- Get new property alerts
- Share with friends and family
Home Values

Find and compare local neighborhood home values

Try it