By Tim Foley
RISMEDIA, Oct. 8, 2007-With children of Baby Boomers entering college at an unprecedented rate, it is no surprise that at many colleges and universities, particularly public ones, the demand for campus housing exceeds the supply. The U.S. Census Bureau estimates that 18 million students will be in college this fall. But parents may be able to turn this impediment into an opportunity by investing in an off-campus property for their child.
According to recently published statistics from Real Capital Analytics data, investors have spent at least $1.5 billion on U.S. student housing properties this year-already 12% more than the average spent over the previous six years.
Student housing is always in demand, regardless of the economic fluctuations that impact apartments and other rental properties. In addition, there is a real benefit to investing money that otherwise would be applied to dormitory or fraternity payments, in a tangible asset.
However, there is one disadvantage: the higher mortgage rates and insurance premiums that go along with rental property financing. But at Chase, we recently rolled out a new mortgage program that can help parents who are in this situation. The Chase Family Opportunity Mortgage is designed to help consumers buy a home for their children attending college.
For parents of college students, Chase Family Opportunity classifies the property as a second or vacation home. As a result, the parents could pay $2,600 less in points on a $150,000 second-home loan than on a rental property mortgage, where points up to 1.75% of the loan amount may be charged with a 10% down payment.
The specifics for loans benefiting college students include:
The property must be a reasonable distance from the parent’s home to be a second home.
The parent(s) may not own an additional second or vacation home in the same locale.
The parent(s) must apply for and qualify for the loan.
The student is not an applicant and does not factor into qualifying for the mortgage.
The parent(s) own the property, but may put the student’s name on the title, if he or she is of legal age.
Chase Family Opportunity also is designed for Baby Boomers who want to help their parents buy a home when they are on a fixed income or would not otherwise qualify for a home loan on their own. While the adult child is the primary qualifier for the loan, the aging parent actually owns the home and can take advantage of the benefits that come with homeownership. RE
Chase is an equal housing lender.
Tim Foley is senior vice president of product development at Chase. For more information, please visit www.chase.com.