Co-Signing a Mortgage, not the best thing to do.

I had a couple of transactions this past year where the good intentions a a family member came back with less than ideal rewards.

As the mortgage industry amends lending requirements and tightens up the system, home-buyers with issues look to family members for assistance. Specifically, getting a family member to co-sign a mortgage to allow the loan to go through.

One of my clients had done a good turn for her mother a few years back and co-signed the mortgage , as she wasn't ready to buy a home and her credit was excellent. When we went to get her qualified, the outstanding note appeared and for a while it looked like she would not be able to get her own mortgage. Her answer came when the lender requested proof of payment of the mortgage in the form of cancelled checks, coming from her mother's account to which she had no access. This went through.

The second case was less fortunate. Again one brother co-signed for another brother, and lived in another town. The first brother lost his job, became unable to meet the mortgage and was forced to sell the house via short sale. The lender recognized the situation and offered the good Samaritan a letter from the bank supporting the issue and also did a clean up of his credit report. When he came to buy, the lender he wanted to use told him he would have to wait for 3 years to get the issue cleaned up from his credit report. In asking me for help, I suggested he go back to the original lender that wrote the letter as they were familiar with the situation, and they politely declined and told him to wait the three years.

Being supportive of ones family is the way we should live our lives. Understanding that the financial obligations of siblings is something that should be steered away from as issues develop and our own finances become compromised.

Whether looking to buy or sell, we service the Greater Waterbury towns of Beacon Falls, Bethany, Cheshire, Naugatuck, Middlebury, Thomaston, Waterbury, Watertown and Wolcott 

Ed Silva  RE/MAX PARTNERS,  www.edwardsilva.com  203-206-0754