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My parents are trying to get a mortgage refinance cashout on the house. My sister still lives at home and has all tax returns and W2s with parents' address on them as well as all her identification. I returned to the nest a little over a year ago but all my tax returns and W2s have my old address on them. My identification is all under my old address. (I don't drive so I never bothered to go to the DMV for a new state ID)
Would my sister be able to include her income in the DTI? Would there be any way that I would be able to include my income?
I'm in the process of getting a paystub from my work with my address on it so I can get an updated state ID.
EDIT: Also, if we include our income in the DTI, is there any way it could negatively impact us? Obviously they are at risk of losing the house. But could it hurt our credit if we sign and they miss payments and stuff?
If your income and that of your sister is to be included in the DTI ratio, you will also be included on the mortgage as co-signers. Yes, it will hurt your credit if they don't pay on time. Your ID and address are the least of the issues with the plan.
I didn't ask in your post yesterday, but if they couldn't pay the taxes in the past because they were "too much," how in the world will they be able to afford them going forward? How will refinancing allow them to pay off their debts and mortgage monthly? It really sounds like they need to proactively try to sell the place. Perhaps start with the current lender and inquire about a short sale, etc.
If you and your sister are living with your parents and have your own incomes why aren't you contributing to the payments and taxes instead of just freeloading?
Letting your parents drown in more debt isn't the answer.
My parents are trying to get a mortgage refinance cashout on the house. My sister still lives at home and has all tax returns and W2s with parents' address on them as well as all her identification. I returned to the nest a little over a year ago but all my tax returns and W2s have my old address on them. My identification is all under my old address. (I don't drive so I never bothered to go to the DMV for a new state ID)
Would my sister be able to include her income in the DTI? Would there be any way that I would be able to include my income?
I'm in the process of getting a paystub from my work with my address on it so I can get an updated state ID.
EDIT: Also, if we include our income in the DTI, is there any way it could negatively impact us? Obviously they are at risk of losing the house. But could it hurt our credit if we sign and they miss payments and stuff?
Not sure how old your parents are but:
If you refi with all 4 of you in a manner that can "save" the situation, after that maybe look at a Reverse mortgage with only your parents on it, to get you two off the note and remove the need for a house payment.
Another problem is that it changes your debt to income ratios. So you could have trouble qualifying for other things you try to buy in the future, or possibly even renting a place. At the very least, expect issues with landlords asking you about the mortgage every time you apply to rent somewhere, and may require you to have higher income as a result, to be able to cover both payments, even though you aren't making the mortgage payment. In order to remove you so that you no longer have these issues, they would have to refi once again. Every refinance costs money.
As fellow Members have mentioned, you and your sister would need to be on the loan application in order to be able to use your income to help your Parents qualify.
If your Parents miss payments on their mortgage it will 100% negatively affect your credit score as this is just as much your mortgage as it is your Parents mortgage if you go on the application with them.
We see this a lot when Borrowers have an auto loan on their credit report that belongs to one of their kids because they decided to co-sign for them. What they don't understand and the hard truth they have to come to grasp is that they are just as much responsible for the auto loan as their kid. That's the whole point of co-signing for them. They can't qualify on their own or, they can't get a desirable interest rate on their own so the Parent jumps on the application to strengthen the credit profile of the application, thus the kid now gets a better deal that the kid never really earned on their own.
As others have mentioned, if your parents can't make the payments now, what's the gameplan? I presume that by applying for the cashout-refi that your Parents would use the additional equity on their house to payoff their credit debts thus lowering their total monthly payment obligations which would allow them to afford their mortgage payment?
Good luck and let me know if you have any questions at all.
OP, one additional concern from an UW POV - is or has the current mortgage been past due? Almost every lender will be exploring this application as a potetial bailout loan, something no one will want to take on
Hey everyone. My mom decided to back out after doing some research on a few things. Honestly she's just in a lot of trouble with her credit card debt and all she cares about is not losing her house so she saw this as a way to pay off her debts. We live in Illinois where there is only a 15k state exemption law so she could very well end up losing her house if she winds up not being able to pay off the cards. (Correct me if I'm wrong.. I hope I am.) In response to that one poster, my sister and I help her out financially more than I'm comfortable with. But anyway, she's about $50,000 in credit card debt and has a $70,000 mortgage that she can only pay the interest on so it hasn't gone anywhere in years.
I'm going with her to a debt counselor next week so we can hopefully find some answers. I'd like it if she'd attempt a debt management plan but we'll see.
Anyone here have any advice?
Thanks again for all the answers. I realize some of them were a little bit of tough love.
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