Question by picturemanbill: How can I cosign a mortgage for my son?
My son asked me to put My Name on his mortgage for one year . He say’s he can refinance in a year and take on the mortgage
at a better rate. The question is I have credit and he doesn’t. So reliability is My Concern.
If he misses or is Late with a payment can I legally have it written up that if in fact it does happen I can get out of the deal and he would have to take on the Mortgage at the Higher rate?
Answer by orlando
No, you can’t undo it. You are at the mercy of your trust for your son. I don’t know your situation, but many of situation go bad amongst family members in business dealings. Hard to separate heart from reality. If you really feel in your heart that your son is good for this commitment, then, by all means, proceed. But know that in able for him to refi in a year, he has some serious work to do to bring his credit up to par – just having a house these days doesn’t guarantee a refi.
The whole purpose of a co-borrow is for the lender to have somebody else to go after if the primary borrower skips out. I dont think any lender will sign off on his/your irresponsibility.
Know better? Leave your own answer in the comments!
No this will not work.You become a mortgage holder and if he missed any payments you will not know about it until your credit is tarnished and then it is too late. You will become owner of the entire mortgage and he will default. Do you have this much credit that you can pay 2 mortgages. If so then consider it .If not stay away.
Mortgage loans do not have co-signers they have co-borrowers which means that you are jointly and equally responsible for the mortgage debt. If he defaults you are equally liable and can be pursued for collection of any unpaid mortgage debt up to and including foreclosure. The only way he could remove you from title is to refinance and in order to do that he’d have to have sufficient equity, good credit, and be able to qualify for a loan on his own merit.
I’ve seen so many cases in which the person who tried to help by becoming a co-borrower got the dirty end of the stick, I simply cannot recommend it.
Why would the mortgage company agree to this? They want you to cosign because they aren’t confident your son will make the payments. If he’s late or stops paying entirely, they want someone they know has the money to pay on the hook. Your son agreeing to let you off means diddly-squat.
And what happens if your son isn’t able to refinance in a year? Most plans like that, you take the loan for 2 years minimum and then, if your payments are ALL on time, they will offer lower rates, or you’ll be able to look elsewhere without penalty.
Think long and hard about this…..
If you intend to do this, do it the same way you would for someone who is NOT your son.
See an attorney in your state. There are variations in state laws that will determine which way to protect yourself. They include:
1. A notarized contract where he will either do A, B, C, or sign the property over to you.
2. A mortgage on the property to secure his promise to make those payments and do the refinancing.
3. A Deed to be held in Escrow by the attorney to ensure those promises are kept.
As an alternative, you could lend him a set amount for the purchase, and hold the second mortgage. That would get him a better interest rate by improving his loan-to-value on the first mortgage. This might be the best option, as it limits your exposure to the amount of the loan, and cannot affect your credit at all.
Whichever works best all things considered, do it “arm’s length”.
You can’t only sort of be a co-borrower.
Only do this if you can afford to make his payments if he does not (remember if he doesn’t it goes against both of your credits, including lates). Also only do it if you can do it for much longer then one year.
There is no way to know the mortgage rates a year from now and no way to know if he will qualify on his own or not.
We raise our children, teach them ethics and morality and one day hope they do as most other animals do fly the coop and make us proud.
We might even help get their first car with a few hundred dollars.
That is about it. They should get married, have children for us to spoil and see life through their young eyes and hope they are like the kids that put us through all the things you have been through with your children.
There is nothing in the parenting book that says if they have developed bad credit habits we have to bail them out. If they do not pay the bills they have, how do you expect them to pay one that you will co-sign with them on.
They are on their own, oh they will be pissed for a few months, but you will sleep very well at night knowing that you are not responsible for their mortgage if they fail to pay for it. If they fail to pay and you ask about it they will insult you and act as if it is your fault.
The mortgage company will come after you for his failure to pay, it will also affect your credit.
He needs to clear his credit up or accept the interest rate he is qualified on based on his credit report.
I hope that this has been of some use to you, good luck.
no…the purpose of a co-signer is to guarantee the payment of the debt!