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The pitfall is that if she defaults for any reason: illness/injury is one; it will affect you and your credit rating unless you pick up the missed payments but you have no interest in the house. Also, if she dies, the home goes to her heirs but the mortgage is still in your name - and your credit.
Rather than co-sign, it would make more sense to me to have you both on the deed and mortgage with an agreement - in writing - that you will quitclaim your interest in the home to her when she can refinance on her own. For that you need to see a lawyer.
That's an interesting idea that did not cross my mind. Thank you. And yes, I would not do anything without a lawyer.
Some people just CAN NOT own homes.One year of paying a mortgage means nothing in proving this person can buy a home. She needs to rent..
I made a mistake. It isn't one year. It's seven. I am not sure why I typed "one". I must have heard the word. Because of her ex-husband's credit, the mortgage is high, and she does not need the space.
Renting for her is out of the question. Her pets are very important to her.
If you are prepared to carry the entire load of the mortgage until it is discharged, then co-sign, but realize that you are assuming risk.
Since you are assuming risk, you should be compensated for this risk. You can have a split title wherein you receive a portion of the ownership based on mortgage and maintenance (incl taxes) payments you make. The final allocation determined at sale.
If she makes all the payments and there are no arrears when mortgage is discharged due either to sale of property or sole refinance, your ownership could be a small percentage of the total, say 1% as payment for assuming the initial risk. You could reserve the right to waive that as a true gift to your friend.
Why do you need to co-sign for her? Is it an income issue? There are lenders who will accept a 600 credit score on an FHA loan. I think your friend needs to explore her options for purchasing on her own. I wouldn't ever co-sign for a friend.
No. It's a credit issue. She is a Registered Nurse and I have known her since we both attended nursing school after graduating from college with a four year degree. She has a substantial down payment. She's been at her current job for a decade and she has been promoted.
Her house is falling apart and has been a money pit for years. She needs a smaller 2 or 3 bedroom home that does not require constant attention and is not on an acre and a half.
600 is a bad credit score. If she has a good job, why is it so low? I would never co sign for anyone, other than my spouse. Don't do it.
An Uncle cosigned on a truck for a relative, relative missed some payment, & when Uncle asked him about it, his response was, it's your credit on the line. (His was already bad)
Why can't she sell her home first, then buy a smaller home? Otherwise she will be paying a mortgage on two homes until the first one sells. I wouldn't co-sign into that mess.
Perhaps you could buy a suitable house, then when she sells her house she could move right in and buy the house from you. Then you assume no risk from any problems that might arise.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Originally Posted by evening sun
600 is a bad credit score. If she has a good job, why is it so low? I would never co sign for anyone, other than my spouse. Don't do it.
An Uncle cosigned on a truck for a relative, relative missed some payment, & when Uncle asked him about it, his response was, it's your credit on the line. (His was already bad)
600 is not bad, but it's Fair, and means higher interest rate. The fact that you were asked to co-sign means she cannot afford it. If you ever watch Judge Judy on TV, a good percentage of cases are about people who cosigned getting stiffed.
Don't do it. She should sell her house, and rent while building up her credit score.
No. It's a credit issue. She is a Registered Nurse and I have known her since we both attended nursing school after graduating from college with a four year degree. She has a substantial down payment. She's been at her current job for a decade and she has been promoted.
Her house is falling apart and has been a money pit for years. She needs a smaller 2 or 3 bedroom home that does not require constant attention and is not on an acre and a half.
Adding a co-borrower when the issue is credit does no good. Lenders use the middle score of the lowest scoring applicant. Co-borrowers help when the issue is income and debt-to-income ratios.
There are lenders who will finance with 600 credit, especially on an FHA loan and especially if your friend has money for a sizable down payment. Advise her to start calling lenders in her area. She should be able to do this on her own.
No. It's a credit issue. She is a Registered Nurse and I have known her since we both attended nursing school after graduating from college with a four year degree. She has a substantial down payment. She's been at her current job for a decade and she has been promoted.
Her house is falling apart and has been a money pit for years. She needs a smaller 2 or 3 bedroom home that does not require constant attention and is not on an acre and a half.
Please do no let emotion override common sense. Can you afford to loose it? Then give her the money. If a lender does not there is a reason.
I'd have a chat with a real estate attorney, if I really wanted to help this friend.
Mortgages used to be private affairs between 2 individuals, and it may still be in your state. In that case you buy the house and carry the mortgage until it is paid off. If she defaults or dies, you get the house just like a bank would.
Yes, this is a great option. I have known of several people who have purchased homes directly from owners and had the whole things worked out with a real estate attorney. No banks involved. If you are in a position to do this, then it could be a viable option.
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