Co-Signing Home for Family

[real_madrid09]

If you Co-Sign a home for your parents, how does it affect your credit score? What if they make each payment on time, and there are no problems with the payments?

 Can it actually improve your score if the payments are made on time- no issues?

[RockinRay]

I would never do this - "if" there were ever a problem and they could not make the payments, that would be on your back and if you could not make the payment, well, there goes your credit too.

All of the financial rags that I read state never loan or co-sign a loan for family. Bad move...

JMO.

Ray

[UFGuy2006]

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@RockinRay wrote:

I would never do this - "if" there were ever a problem and they could not make the payments, that would be on your back and if you could not make the payment, well, there goes your credit too.

All of the financial rags that I read state never loan or co-sign a loan for family. Bad move...

JMO.

Ray

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One other thing to consider is that down the road when you decide you want to buy a home of your own, you will have a hard time qualifying for another home loan if your income can't support it (EVEN if the first morgage is for a home that you don't in fact live in). Not a good idea at all...

[Anonymous]

I agree with Ray on this one. 

I read some threads on here with co-signing nightmares.  Most have sworn to never ever co-sign again. In most situations, the party co-signed for a family member. We trust that family members won't intentionally stiff us. But unfortunately, times are tough right now for many. A default or late payment may not be intentional at all. But the bottom line is that you are securing their debt. And yes, if there is a default, you are saying that you will be responsible for the loan. I would never put my score at risk. And....if you are talking about a 30 year mortgage here, that is a very LONG time to be at anyone's mercy.

[real_madrid09]

Thanks for the responses. Just one more question. Can it negatively affect your chances of getting approved for a prime credit card (lendor sees you have too much debt, therefore, you're a risk)?

[Anonymous]

The ability to obtain a CC will depend on your income. Same would hold true for an auto loan.

Companies will look at debt to income ratio. They don' t just look at a score.

[SevenNEW]

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@Anonymous wrote:

The ability to obtain a CC will depend on your income. Same would hold true for an auto loan.

Companies will look at debt to income ratio. They don' t just look at a score.

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And definitely they look differently at mortgage and revolving debt. A mortgage does, however, sink your score in the short term, and the various inq's you need to take to negotiate it have also a negative effect. I would say you need to stay put for roughly one year after you have taken it.

And I agree with the responses above -- it's a lot to take on!

[UFGuy2006]

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@Anonymous wrote:

The ability to obtain a CC will depend on your income. Same would hold true for an auto loan.

Companies will look at debt to income ratio. They don' t just look at a score.

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+1

[KingAdrock]

If you co-sign for a loan, you are making it YOUR loan. You are responsible for any and ALL debt if the other person doesn't pay. So if the account goes bad, it will show on your CR exactly the same as if it were your own account.

Unless you have the capablity to take over paying 100% of all payments in case of any problems AND you are able to monitor that payments are being made on time, then you shouldn't even consider co-signing, IMHO.