Second mortgage financing issue (cosigner, credit card, requirements, refinance)

[relocating_family]

Here is my problem:
-We own a home in FL with my mother. She supplied the down payment, we supplied income requirements.

-She moved out 3 years ago, we stayed in the home but are ready to buy our own house in PA.

-My mother is a hair dresser and does not show the income to refinance and take my husband's name off the mortgage. We are forced, for a time, to keep our name on the home.

-We have the income required to take on a second mortgage and are in the UW process. The glitch is that beyond the down payment, the bank wants to see an additional $18k in our bank accounts to cover both mortgages for 6 months.

-We don't have that much beyond our down payment.

This is the question:
Should we temporarily borrow that money (if we can)? Or should we try to take my mother on as cosigner? She has approx $50k in the bank and stellar credit. Would that work?

[karen_in_nh_2012]

When you say the banks want to see an additional $18k "in your bank accounts," does that just mean checking/savings/money market accounts (i.e., presumably liquid accounts)? I ask because when I bought my current house, I was keeping my old house (renting it out) and my lender had the same requirement (6 months of funds to cover both mortgages) BUT my 401(k) was counted. I checked and double-checked on this because it didn't seem logical that they would count something that wasn't really liquid, but they did.

It also seems like having your mom co-sign would work as well, given her stellar credit -- better than you borrowing the funds (as that would count on your debt-to-income ratio and could very well lower your credit score too, if they check it again before closing). Unless you were going to borrow the funds from your mom? (I was thinking that you meant borrowing from credit cards, getting a personal loan, etc., which don't seem like good ideas.)

But I'm a little confused -- is your mom going to move back into that FL house once you move to PA? Or will you be renting out the FL house?

[relocating_family]

My mother is going to retain the FL house and rent it until the market turns around (which it seems to be doing) and she can get her DP back. We would borrow the extra funds from a relative since we are already dipping into our own retirement account for the DP on this new house- not the best idea, I know, but we are young and don't want to pass up a really great deal.

In a way, I am glad to hear that this 6 month rule wasn't just applied to our situation. Sometimes it feels like they make up the rules as they go . Of course we get all of this information on a Friday, which leaves me mulling over it all weekend. Thanks for the advice.