Is there any advantage for me to co-sign a mortgage?

DH and I have been asked to cosign a mortgage with the promise that the buyer will refinance in 2 years. We do not own a home and I am fully aware it will tie my hands as far as school, cars, home of our own, but is there any advantage to us to do this other than putting our BIL into his dream home???

Re: Is there any advantage for me to co-sign a mortgage?

NO this is a terrible thought! Never lend your credit to anyone, family or friends! Your credit is your life. My mortgage guy always tells me the worse thing you can do is lend your credit!

Re: Is there any advantage for me to co-sign a mortgage?

I would pass. If your BIL can't afford the home without you signing it, then he can't afford the home. You could get screwed. IMO, I think your BIL wrong for even asking. There is no benefit for you.

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

I definitely understand that, but he seems to think that it may somehow increase our credit rating if he makes timely payments...is this even true???


Also, does anyone know what recourse I have if we sign and need to get out sooner than he's able to refinance. I feel like I'm totally in the dark...I've done research but I haven't found answers to these questions.

Thanks everyone!

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

NO! NEVER EVER EVER EVER EVER would I do that! If he misses ONE payment you are screwed!

Re: Is there any advantage for me to co-sign a mortgage?

Posted by Belongs2DanBuckley

Posted by SweetestOfPeas

Posted by Belongs2DanBuckley

I definitely understand that, but he seems to think that it may somehow increase our credit rating if he makes timely payments...is this even true???


Also, does anyone know what recourse I have if we sign and need to get out sooner than he's able to refinance. I feel like I'm totally in the dark...I've done research but I haven't found answers to these questions.

Thanks everyone!

oh boy - nice spin.

even if it did help your credit score, you are risking WAY too much by doing it. he misses ONE payment and you are screwed!

not sure how you would get out of a loan you co-signed.

Yea that's how I kinda felt about it but its very difficult to be the kink in the cog. I'm really trying to see how this may help us, but its basically going to screw us for a few years until he's financially able to buy us out.....

Now how do I tell him I don't think we can do this...

What makes me angry though is that he asked DH to do it without coming to the both of us.. a little sneaky.

Idk if he just dosen't understand what he's really asking of us or if he dosen't care.

Anyway, thanks everyone! I think I have my answer

Re: Is there any advantage for me to co-sign a mortgage?

Oh geez please don't. You only hear horror stories about this type of thing. My sister is the most fiscally responsible person I know and even if she asked me I would say no. I would be on pins and needles every month to make sure it was paid, etc, especially in today's market. I do not believe there is any benefit to you and DH at all except maybe your BIL being grateful. As a pp said, it is never a good idea to lend your credit and if he needs a co-signer he can't afford it!

Also what if your situation changes and you and DH have the opportunity to buy something or fall on hard times (god forbid) or have some kind of emergency (again god forbid)? I just think it has too much risk financially and relationship-wise with your BIL. Better him be annoyed that you won't do it now then have a major falling out later on when much more is at stake.

Re: Is there any advantage for me to co-sign a mortgage?

this is HIS issue, not yours!

why does he want you to co-sign? what's the REAL reason?

if it's b/c he can't afford the house w/o your signature, that's fraud. you're basically saying that you're helping pay for and you and DH's salaries are factored into the decision from the lender.

if it's b/c he can't afford any house, period - then maybe he needs to keep renting for a while until he IS ready.

Message edited 11/1/2008 2:19:18 PM.

Re: Is there any advantage for me to co-sign a mortgage?

DO NOT DO IT!!!!!!

Message edited 11/1/2008 2:55:19 PM.

Re: Is there any advantage for me to co-sign a mortgage?

I'd rather have a root canal than cosign a mortgage.

Re: Is there any advantage for me to co-sign a mortgage?

This type of thing turns families into enemies (I watch a lot of judge judy). I wouldn't do it, JMO

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

My Best Friend cosigned for a car loan for me years ago. If she didn't, I couldn't have gotten the car. I never missed a payment and treated that account like gold. It really helped my credit score and did not damage hers. Hers was great before hand. The best outcome for her was not an increase in score, but a stability of score. Remember that. Also, your debt to income ratio will be out of whack. And, although he says that he will refinance in two years, we are not capable of predicting the future of banking guidelines and interest rates. What if the refi rates skyrocket and go back to the historical averages of 15-17%. Could he afford to refinance? What if banks change their guidelines and you need more than 20% equity in the home to refinance? What if he loses his job? Falls ill with a serious disease? Becomes injured in an accident? Gets someone pregnant? Conversely, what if any of those things happen to you or DH? What if you come across an unbelievable bargain for a house that you and DH just couldn't pass up? What if your life situation changes and you want to do something that you are not currently thinking you'll want to do? What if your parents or other loved ones need money for a serious issue? Remember that Your ability to obtain any credit is directly tied to your score AND your debt to income. IMHO, helping out family is wonderful, but this might make you a prisoner of his mortgage without a definite end in sight. Too many what ifs. Please think long and hard and if benevolence is the higher good, than go for it. Good Luck.

Re: Is there any advantage for me to co-sign a mortgage?

i would stay FAR, FAR away from this!!! even though he's family and i'm sure you want to help him out... theres no way i would do it!!
especially since you guys don't have a house of your own yet- depending on what happens to him.. if he can't make the payments, it could jeopardize your chances of owning a home for yourself down the line.
if he can't afford the house without you guys cosigning, thats a good sign that he probably shouldn't be buying that house...
there are WAY WAY too many risks in this... don't let him talk you into it! just say no!

Re: Is there any advantage for me to co-sign a mortgage?

Also, and maybe other homeowners can comment as well: I have been paying my mortgage on time for the past 2+ years. My credit score did not increase as a result. It is the same, if not slightly lower than what it was when I bought the house. And, I have not taken out any new credit accounts since then. Point being, timely payments do not increase your score. It's not a merit-based system. It's a demerit based system that takes points away when you're "bad".

Re: Is there any advantage for me to co-sign a mortgage?

stay away from it, have his parents co-sign it... you two are a married couple and shouldnt take on this risk

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

Re: Is there any advantage for me to co-sign a mortgage?

ok thanks everyone for your input...it really helps. I've been showing DH and it definitely helps put things into perspective for us!!!

Its just a tough situation- we want the best for them but we can't do it to our own detriment. Wish us luck!

Re: Is there any advantage for me to co-sign a mortgage?

I work in the foreclosure department of a law firm and I have many cases where the loans defaulted b/c the person living in the house didn't make the payments. I get calls from the co-signers all the time after being served wondering what happened and why they are being sued. It gets really ugly... I feel bad for the mothers, fathers, sisters, brothers and friends who call me complaining but unfortunately since they co-signed the note, they are 100% responsible for the loan. It completely affects your own credit in a BAD way!

I am not saying this would happen to you but it does happen. Co-signing for anyone is one of the worst things anyone can do to their own financial stability.

Re: Is there any advantage for me to co-sign a mortgage?

please don't

I work in the industry- and it's almost impossible to re-fi now with current home values falling- even if you have perfect credit

I don't see it getting better in 2 years

and to be perfectly honest- the under writer might not even approve this loan in the first place- they are very strict now - the under writer is now personally responsible for every loan they under write- if they even think there is a chance that the loan might go into foreclosure- they are not going to do it