Mortgage Fun
August 27, 2010 5:31 AM Subscribe
The pitfalls of cosigning on someone else's mortgage
My sister and her boyfriend are interested in buying a house. Unfortunately her credit score is sub-par and as a result cannot be used as part of the effort to secure a mortgage. Together their income is more than adequate for their desired mortgage, but without her income things become a bit more tricky. Her boyfriend actually just started working about a year and a half ago after completing his schooling to become a physical therapist. He's making money hand over fist at this point with multiple employers fighting over his time, but his overall income isn't the issue here. Instead, there's concern about his lack of a consistent work history; as I mentioned, he only just finished up his schooling a few years ago (he's 30) and so he hadn't been consistently in the work force until then.
The issue as it stands is that they need someone to cosign on the mortgage application. My sister told me that his parents are out of the question because they're retired (does that matter?) and our parents are out of the question as well for reasons I won't get into. So that leaves me and potentially his sister.
One idea that has been broached is that I would cosign and then at some point in the not too distant future my name would somehow be taken off and transferred to my sister (once her credit score was high enough). Is something like that even feasible?
I want to be there for my sister, but I have concerns about this long term. I imagine something like this would affect my credit score, which I've put a great deal of effort into reviving from the depths of hell over the last five years.
IKYANML, but what should I be wary of if I was to go through with this? What can I expect if I decide that I'd like to buy my own house in a couple of years? How badly could I be affected if they were to break up?
If it's relevant, this is in NY.
My sister and her boyfriend are interested in buying a house. Unfortunately her credit score is sub-par and as a result cannot be used as part of the effort to secure a mortgage. Together their income is more than adequate for their desired mortgage, but without her income things become a bit more tricky. Her boyfriend actually just started working about a year and a half ago after completing his schooling to become a physical therapist. He's making money hand over fist at this point with multiple employers fighting over his time, but his overall income isn't the issue here. Instead, there's concern about his lack of a consistent work history; as I mentioned, he only just finished up his schooling a few years ago (he's 30) and so he hadn't been consistently in the work force until then.
The issue as it stands is that they need someone to cosign on the mortgage application. My sister told me that his parents are out of the question because they're retired (does that matter?) and our parents are out of the question as well for reasons I won't get into. So that leaves me and potentially his sister.
One idea that has been broached is that I would cosign and then at some point in the not too distant future my name would somehow be taken off and transferred to my sister (once her credit score was high enough). Is something like that even feasible?
I want to be there for my sister, but I have concerns about this long term. I imagine something like this would affect my credit score, which I've put a great deal of effort into reviving from the depths of hell over the last five years.
IKYANML, but what should I be wary of if I was to go through with this? What can I expect if I decide that I'd like to buy my own house in a couple of years? How badly could I be affected if they were to break up?
If it's relevant, this is in NY.
Also, given the state of the real estate market, I would worry about your ability to sell the house if it came to that.
posted by R. Mutt at 5:48 AM on August 27, 2010
posted by R. Mutt at 5:48 AM on August 27, 2010
Looking over your question history, two things jump out at me:
1) You very recently dug yourself out of serious, long-term debt.
2) You seem to have a lot of relationships with people who manage money and risk rather poorly.
I'm inclined to suggest that you give yourself permission to be more careful with money and risk than the people around you are being. If you want to feel secure, then make decisions that will keep you secure. You don't have to live on the bleeding edge forever.
posted by jon1270 at 6:04 AM on August 27, 2010 [25 favorites]
1) You very recently dug yourself out of serious, long-term debt.
2) You seem to have a lot of relationships with people who manage money and risk rather poorly.
I'm inclined to suggest that you give yourself permission to be more careful with money and risk than the people around you are being. If you want to feel secure, then make decisions that will keep you secure. You don't have to live on the bleeding edge forever.
posted by jon1270 at 6:04 AM on August 27, 2010 [25 favorites]
This is being asked to be the number two guy on a dock line, and you're tied to it. It's fine when the tide is coming in, but when the tide is going out when the first guy lets go you get hauled into the drink. And: you don't even get to ride in the boat!
Cosigning is something done by comparatively rich relatives as an indulgence. If the loan amount owed isn't "spare change" to you, do not cosign on that loan.
posted by seanmpuckett at 6:07 AM on August 27, 2010 [7 favorites]
Cosigning is something done by comparatively rich relatives as an indulgence. If the loan amount owed isn't "spare change" to you, do not cosign on that loan.
posted by seanmpuckett at 6:07 AM on August 27, 2010 [7 favorites]
Absolutely do not cosign on the loan--that's just asking for financial trouble you don't need. If they've got the cash and just need the credit history, then they should rent until they've got the credit history.
posted by thomas j wise at 6:13 AM on August 27, 2010 [4 favorites]
posted by thomas j wise at 6:13 AM on August 27, 2010 [4 favorites]
I cannot suggest NOT DOING THIS enough. Please, listen to my family's story.
My in-laws did this for their daughter, husband, and child. It has been a constant nightmare. We begged them not to do it, but they were stubborn and did it anyway. The daughter and husband had enough income, but crappy credit. Promised to pay, said they were good people and wanted to do right by my husband's parents.
Well, guess what? Six months in, the daughter and husband stopped paying their mortgage. My in-laws are now paying TWO mortgages, plus all the other stuff. They came close to losing their own house, and are really not doing too well. It's been years fighting this in court, and because of the way the deed was set up (with the expectation that in 3-4 years, they'd be able to refi and get the inlaws off), there's still no clear end in sight. They couldn't just let the place be foreclosed on because their own house would've been in jeopardy. It's been 4 years of this. FOUR YEARS. They very recently started paying about $800 of their $1500 mortgage, but it's a drop in the damn bucket. My in-laws would be ready for retirement today if they'd followed our advice.
If your sister and her husband truly want a house, they can wait 2-3 years and try again. With the housing market the way it is (not knowing where you are, though), there really is NO compelling reason to jump into buying a home when you do not qualify for one for whatever reason. A simple "No, sister, I'm really sorry and I want to help you but I am just getting out of debt right now and I don't want to have issues getting my own house in a few years" should completely satisfy any reasonable and non-manipulative person.
posted by kpht at 6:13 AM on August 27, 2010 [8 favorites]
My in-laws did this for their daughter, husband, and child. It has been a constant nightmare. We begged them not to do it, but they were stubborn and did it anyway. The daughter and husband had enough income, but crappy credit. Promised to pay, said they were good people and wanted to do right by my husband's parents.
Well, guess what? Six months in, the daughter and husband stopped paying their mortgage. My in-laws are now paying TWO mortgages, plus all the other stuff. They came close to losing their own house, and are really not doing too well. It's been years fighting this in court, and because of the way the deed was set up (with the expectation that in 3-4 years, they'd be able to refi and get the inlaws off), there's still no clear end in sight. They couldn't just let the place be foreclosed on because their own house would've been in jeopardy. It's been 4 years of this. FOUR YEARS. They very recently started paying about $800 of their $1500 mortgage, but it's a drop in the damn bucket. My in-laws would be ready for retirement today if they'd followed our advice.
If your sister and her husband truly want a house, they can wait 2-3 years and try again. With the housing market the way it is (not knowing where you are, though), there really is NO compelling reason to jump into buying a home when you do not qualify for one for whatever reason. A simple "No, sister, I'm really sorry and I want to help you but I am just getting out of debt right now and I don't want to have issues getting my own house in a few years" should completely satisfy any reasonable and non-manipulative person.
posted by kpht at 6:13 AM on August 27, 2010 [8 favorites]
jon1270 has boiled this down to its essence: If you can't afford to pay your expenses AND their mortgage, then you can't afford to cosign this loan. That's the long and short of it.
posted by DWRoelands at 6:15 AM on August 27, 2010
posted by DWRoelands at 6:15 AM on August 27, 2010
How much interest do you have in making payments on a home you don't live in and quite possibly don't have title to? A home that is worth less than the balance of the loan that is your responsibility?
Seriously: when it comes to real estate, all that "there's a reason her credit score is low and they both look to risky to lenders" stuff you will see in the answers to every AskMe question with the word "cosign" in it becomes even more important. They should rent and save and pay their bills on time and keep a steady job for several years. Give them a gift of a few thousand dollars to help with the down payment, if you can afford to never see the money again and won't get mad at them for not giving it back or being insufficiently grateful or taking a European cruise six months later.
But do not cosign. I say this as someone who had her dad cosign on her current car loan, and is more afraid of defaulting on that than of most other things. It messes up relationships if everyone isn't both pure of heart and ridiculously careful and frankly scared. And all of that isn't good for the relationships, either!
posted by SMPA at 6:15 AM on August 27, 2010 [1 favorite]
Seriously: when it comes to real estate, all that "there's a reason her credit score is low and they both look to risky to lenders" stuff you will see in the answers to every AskMe question with the word "cosign" in it becomes even more important. They should rent and save and pay their bills on time and keep a steady job for several years. Give them a gift of a few thousand dollars to help with the down payment, if you can afford to never see the money again and won't get mad at them for not giving it back or being insufficiently grateful or taking a European cruise six months later.
But do not cosign. I say this as someone who had her dad cosign on her current car loan, and is more afraid of defaulting on that than of most other things. It messes up relationships if everyone isn't both pure of heart and ridiculously careful and frankly scared. And all of that isn't good for the relationships, either!
posted by SMPA at 6:15 AM on August 27, 2010 [1 favorite]
I think you shouldn't do this. It won't hurt your sister and her boyfriend to wait for a few years to buy a house. It may even be in their best interests to do so because it'll give them time to pay down their debts, add to their down payment and repair/build their credit.
posted by orange swan at 6:16 AM on August 27, 2010 [1 favorite]
posted by orange swan at 6:16 AM on August 27, 2010 [1 favorite]
Nobody ever died from being a renter for a few more years. It's just one of the things that is true in life that sometimes you can't do what you want right this minute, and it is totally typical to be out of school for a few years before being in a position to buy a house. Likewise, it is absolutely typical to not be able to get more credit when your credit is bad. The bank won't lend them the money because they don't have the income history or the history of maintaining good credit. Neither should you--you even less than the bank, because default could be devastating to your finances. The risks to you totally outweigh any benefit they get from buying now versus in a few years. Don't do it.
posted by not that girl at 6:24 AM on August 27, 2010 [3 favorites]
posted by not that girl at 6:24 AM on August 27, 2010 [3 favorites]
I don't need to ask any other questions regarding the situation. DO NOT DO IT. It may seem mean, it may seem like you don't care about your sister, but putting this kind of money in the hands of other people is almost certainly a recipe for disaster. I've been in a very similar situation and did it and its probably the worst decision I've ever made.
posted by Scientifik at 6:46 AM on August 27, 2010
posted by Scientifik at 6:46 AM on August 27, 2010
Another "don't do it" from me, but to answer another of your questions:
What can I expect if I decide that I'd like to buy my own house in a couple of years?
When you cosign, you are considered to be responsible for the amount owed. If you apply for a mortgage while still attached to your sister's loan, that amount will be included in your debt-to-income ratio. Unlikely that you could qualify for a mortgage while already "owing" on one.
posted by erloteiel at 6:56 AM on August 27, 2010 [1 favorite]
What can I expect if I decide that I'd like to buy my own house in a couple of years?
When you cosign, you are considered to be responsible for the amount owed. If you apply for a mortgage while still attached to your sister's loan, that amount will be included in your debt-to-income ratio. Unlikely that you could qualify for a mortgage while already "owing" on one.
posted by erloteiel at 6:56 AM on August 27, 2010 [1 favorite]
I've posted my feelings on co-signing on loans before.
If "HELL NO" isn't the right phrase to use with your sister and her boyfriend, I'd say "I'm very, very sorry, but I can't help you with this."
posted by Lucinda at 6:59 AM on August 27, 2010
If "HELL NO" isn't the right phrase to use with your sister and her boyfriend, I'd say "I'm very, very sorry, but I can't help you with this."
posted by Lucinda at 6:59 AM on August 27, 2010
Do not do this.
posted by languagehat at 7:01 AM on August 27, 2010
posted by languagehat at 7:01 AM on August 27, 2010
Just say no. You're fuzzy on the details and have concerns. Red flags all around and I think you already know this.
If they break up, you're still on the hook. If they default or fall on hard times, you're still on the hook. If they can't refinance and get your name off the loan and puts hers on, guess what? Still on the hook. Everything about being on the hook means you are responsible for the amount owed.
You will not, most likely given the vague picture painted into your own credit and financial troubles, be able to buy your own home while on the mortgage for THEIR home.
They need to be renting and saving money hand over fist for a ginormous down payment, establish work history, and get their credit-worthiness in order.
posted by jerseygirl at 7:06 AM on August 27, 2010 [1 favorite]
If they break up, you're still on the hook. If they default or fall on hard times, you're still on the hook. If they can't refinance and get your name off the loan and puts hers on, guess what? Still on the hook. Everything about being on the hook means you are responsible for the amount owed.
You will not, most likely given the vague picture painted into your own credit and financial troubles, be able to buy your own home while on the mortgage for THEIR home.
They need to be renting and saving money hand over fist for a ginormous down payment, establish work history, and get their credit-worthiness in order.
posted by jerseygirl at 7:06 AM on August 27, 2010 [1 favorite]
Getting one person's name off the mortgage requires refinancing, which costs money and takes a good deal of time and your new mortgage rate has to be lower than the one you originally had, or you'll end up paying more over the long term. Getting one person's name off the title to the house is also an expensive huge deal. Houses are expensive to buy and hard to maintain. I currently own a house with my ex-wife. It is worth less than we paid for it, and we have had to replace the roof, fix the foundation, replace the a/c, all in the last 4 years. We will own this house together for a long time. Luckily we have an amicable relationship.
Don't put yourself in this position. I have never heard of this working out, but I have heard plenty of horror stories. So you say no to your sister now, and she's a little huffy for a few weeks. That is nothing to permanently destroying your relationship with your sister and possibly your family (the person in your situation gets to be the bad guy for demanding that the mortgage be paid in many versions of this story).
posted by aabbbiee at 7:16 AM on August 27, 2010
Don't put yourself in this position. I have never heard of this working out, but I have heard plenty of horror stories. So you say no to your sister now, and she's a little huffy for a few weeks. That is nothing to permanently destroying your relationship with your sister and possibly your family (the person in your situation gets to be the bad guy for demanding that the mortgage be paid in many versions of this story).
posted by aabbbiee at 7:16 AM on August 27, 2010
Response by poster: Thanks for the advice folks.
Suppose that, in the face of all of this advice to the contrary, I was to cosign and they never defaulted or fell behind on payments. Now suppose that they were unable to refinance to remove my name from the mortgage. If I decided to buy my own house in a few years, would the boyfriend be able to cosign on my mortgage to return the favor? Or is that sort of thing disallowed?
I feel incredibly uneasy about this entire situation, but at the same time I'm also incredibly indebted to my sister, who has been unyielding in her nurturing and support as I've grown up. I can't help but feel like an absolute jackass if I was to say no and prevent her from getting the house she's got her heart set on.
posted by Raze2k at 7:31 AM on August 27, 2010
Suppose that, in the face of all of this advice to the contrary, I was to cosign and they never defaulted or fell behind on payments. Now suppose that they were unable to refinance to remove my name from the mortgage. If I decided to buy my own house in a few years, would the boyfriend be able to cosign on my mortgage to return the favor? Or is that sort of thing disallowed?
I feel incredibly uneasy about this entire situation, but at the same time I'm also incredibly indebted to my sister, who has been unyielding in her nurturing and support as I've grown up. I can't help but feel like an absolute jackass if I was to say no and prevent her from getting the house she's got her heart set on.
posted by Raze2k at 7:31 AM on August 27, 2010
[W]hat should I be wary of if I was to go through with this? What can I expect if I decide that I'd like to buy my own house in a couple of years? How badly could I be affected if they were to break up?
You kind of answered your first question with your next two. This goes beyond kindness to a beloved sister, and into an actively bad idea.
I cosigned a loan, and later got my own low-doc loan, but it was only because each and every payment made in the intervening 3 years was made by the "primary mortgagor" (there really is no such thing as co-signer, you are jointly responsible). And I got my second loan back when banks were giving out loans like lollipops. If one payment had been late or made by me, I'm pretty sure the bank would not have been willing to look the other way in figuring my debit to income ratio.
If you're sister and her boyfriend split up, you will remain jointly responsible for the loan with the boyfriend (assuming he is the joint mortgagor). You will not be able to refinance the loan or sell the property without the ex-boyfriend's cooperation. The bank will insist the "principal mortgagor" is on the deed and may deny a request to put your sister on the deed. You could conceivably wind up responsible for the mortgage payments but unable to evict your sister's ex-boyfriend. I'm sure he's a great guy now, but people change. Think long and hard about that.
If you want to do this you should consider buying the house they'd like with an agreement to rent it for the monthly mortgage amount and sell it to them for the same amount as soon as they can get the loan. That has tax implications now and in the future, but t least that way you'd have the ability to evict and sell should it become necessary.
posted by McGuillicuddy at 7:32 AM on August 27, 2010
You kind of answered your first question with your next two. This goes beyond kindness to a beloved sister, and into an actively bad idea.
I cosigned a loan, and later got my own low-doc loan, but it was only because each and every payment made in the intervening 3 years was made by the "primary mortgagor" (there really is no such thing as co-signer, you are jointly responsible). And I got my second loan back when banks were giving out loans like lollipops. If one payment had been late or made by me, I'm pretty sure the bank would not have been willing to look the other way in figuring my debit to income ratio.
If you're sister and her boyfriend split up, you will remain jointly responsible for the loan with the boyfriend (assuming he is the joint mortgagor). You will not be able to refinance the loan or sell the property without the ex-boyfriend's cooperation. The bank will insist the "principal mortgagor" is on the deed and may deny a request to put your sister on the deed. You could conceivably wind up responsible for the mortgage payments but unable to evict your sister's ex-boyfriend. I'm sure he's a great guy now, but people change. Think long and hard about that.
If you want to do this you should consider buying the house they'd like with an agreement to rent it for the monthly mortgage amount and sell it to them for the same amount as soon as they can get the loan. That has tax implications now and in the future, but t least that way you'd have the ability to evict and sell should it become necessary.
posted by McGuillicuddy at 7:32 AM on August 27, 2010
Suppose that, in the face of all of this advice to the contrary, I was to cosign and they never defaulted or fell behind on payments. Now suppose that they were unable to refinance to remove my name from the mortgage. If I decided to buy my own house in a few years, would the boyfriend be able to cosign on my mortgage to return the favor? Or is that sort of thing disallowed?
Theoretically, yes, if you could prove to the bank that between the three of you you have the assets and income to pay two mortgages. But then you're in the situation where if any of the three of you (you, your sister, her boyfriend) loses his/her job and stops making payments, and the other two can't cover the payments, BOTH houses are going to be foreclosed on because both sets of names are on both mortgages. You really don't want to get your name involved in financial matters that are outside your control.
Banks have income and credit requirements for a reason. Trying to circumvent them is a bad idea on its face (witness the last five years or so of real estate imploding because so many people did), and there's a very real chance you'll be absolutely eviscerated if you go along with this and it turns south.
posted by Mayor West at 7:39 AM on August 27, 2010 [2 favorites]
Theoretically, yes, if you could prove to the bank that between the three of you you have the assets and income to pay two mortgages. But then you're in the situation where if any of the three of you (you, your sister, her boyfriend) loses his/her job and stops making payments, and the other two can't cover the payments, BOTH houses are going to be foreclosed on because both sets of names are on both mortgages. You really don't want to get your name involved in financial matters that are outside your control.
Banks have income and credit requirements for a reason. Trying to circumvent them is a bad idea on its face (witness the last five years or so of real estate imploding because so many people did), and there's a very real chance you'll be absolutely eviscerated if you go along with this and it turns south.
posted by Mayor West at 7:39 AM on August 27, 2010 [2 favorites]
Also, one other addendum: if you were do this, you'd lose all your first-time-homebuyer-program availability (which means the ability to put less than 20% down, and some interest rate advantages), because on paper, you're already a co-mortgagor of your sister's house.
Bad juju.
posted by Mayor West at 7:41 AM on August 27, 2010 [3 favorites]
Bad juju.
posted by Mayor West at 7:41 AM on August 27, 2010 [3 favorites]
I agree with all of the other posters that this is a terrible idea, and you've gotten some great practical advice. I just wanted to address this:
I can't help but feel like an absolute jackass if I was to say no and prevent her from getting the house she's got her heart set on.
You're not preventing her from getting her dream house, and more than you're preventing her from being a millionaire by failing to give her a million dollars. Your sister is asking you to put your own financial future at stake because she's temporarily paying for her past financial mistakes. If she and her boyfriend are truly financially responsible, they'll be able to buy a house on their own in a couple of years. If they're not, they shouldn't be buying a house. Either way, your assistance is not required in order to make them homeowners.
Even if they're responsible, you're still hampering your own ability to move forward financially by doing this. Even if your sister had saved your life by giving you a kidney, you don't owe it to her to be shackled to her financially for the next 30 years.
By all means, pay your sister back for her nurturing and emotional support. But pay her back in kind, with all the love and support you can give her. Exchanging money with loved ones is never a good idea. It's not really fair of her to ask, and you're not responsible for the fact that her past has caused her not to qualify for a mortgage.
posted by decathecting at 7:46 AM on August 27, 2010 [29 favorites]
I can't help but feel like an absolute jackass if I was to say no and prevent her from getting the house she's got her heart set on.
You're not preventing her from getting her dream house, and more than you're preventing her from being a millionaire by failing to give her a million dollars. Your sister is asking you to put your own financial future at stake because she's temporarily paying for her past financial mistakes. If she and her boyfriend are truly financially responsible, they'll be able to buy a house on their own in a couple of years. If they're not, they shouldn't be buying a house. Either way, your assistance is not required in order to make them homeowners.
Even if they're responsible, you're still hampering your own ability to move forward financially by doing this. Even if your sister had saved your life by giving you a kidney, you don't owe it to her to be shackled to her financially for the next 30 years.
By all means, pay your sister back for her nurturing and emotional support. But pay her back in kind, with all the love and support you can give her. Exchanging money with loved ones is never a good idea. It's not really fair of her to ask, and you're not responsible for the fact that her past has caused her not to qualify for a mortgage.
posted by decathecting at 7:46 AM on August 27, 2010 [29 favorites]
What decathecting said, a million times over.
posted by jerseygirl at 7:49 AM on August 27, 2010
posted by jerseygirl at 7:49 AM on August 27, 2010
Please do not repay your sister for her nurturing and support by potentially ruining your financial future.
posted by freshwater at 7:51 AM on August 27, 2010 [1 favorite]
posted by freshwater at 7:51 AM on August 27, 2010 [1 favorite]
You most emphatically would NOT be a jackass to say no.
Frankly, no one in their right mind would say yes to this hare-brained idea. You don't even own your own house, yet you believe it is somehow your job to get your sister into one and take on a possibly life-altering bunch of risk to boot? That kind of thinking is not just misguided, it's dangerous. To you.
Don't allow this to feel like you're somehow at fault that your sister is not in a position to buy a house right now.
posted by Short Attention Sp at 7:54 AM on August 27, 2010 [2 favorites]
Frankly, no one in their right mind would say yes to this hare-brained idea. You don't even own your own house, yet you believe it is somehow your job to get your sister into one and take on a possibly life-altering bunch of risk to boot? That kind of thinking is not just misguided, it's dangerous. To you.
Don't allow this to feel like you're somehow at fault that your sister is not in a position to buy a house right now.
posted by Short Attention Sp at 7:54 AM on August 27, 2010 [2 favorites]
You are NOT a jackass for refusing to do this. You are smart. And it is not about trusting your sister. What if she and/or her boyfriend through no fault of their own become unable to work? If they are hurt or have a bad medical condition?
would you bet your financial future that NONE of these things will happen:
- they break up
- one or both lose their jobs
- one or both get sick & can't work
- they flake out
- the house is damaged by an act of god (flood etc) & insurance not covered so house loses value
- the real estate market gets worse
- interest rates rise so refi is impossible
- you & they have a falling out
-etc, etc etc
How about any of these things happening to YOU and you need money or a loan or help?
I hate to sound like a downer but I just cannot stress enough that this is a bad, bad, idea.
Also keep in mind that many jobs now do credit checks (whether is right or wrong it happens). Keeping your debt to income ratio is vital.
If she wants you to risk this for a house she has her heart set on, that's manipulative. I can't imagine asking someone I love to do that so I could have a cute house.
posted by pointystick at 7:55 AM on August 27, 2010 [1 favorite]
would you bet your financial future that NONE of these things will happen:
- they break up
- one or both lose their jobs
- one or both get sick & can't work
- they flake out
- the house is damaged by an act of god (flood etc) & insurance not covered so house loses value
- the real estate market gets worse
- interest rates rise so refi is impossible
- you & they have a falling out
-etc, etc etc
How about any of these things happening to YOU and you need money or a loan or help?
I hate to sound like a downer but I just cannot stress enough that this is a bad, bad, idea.
Also keep in mind that many jobs now do credit checks (whether is right or wrong it happens). Keeping your debt to income ratio is vital.
If she wants you to risk this for a house she has her heart set on, that's manipulative. I can't imagine asking someone I love to do that so I could have a cute house.
posted by pointystick at 7:55 AM on August 27, 2010 [1 favorite]
Response by poster: Sigh, I've already told her my concerns. I said that I would be there for her if she needed me to be and asked me to. I'm not sure if I could walk that back without feeling even worse.
This situation has left me with a sick feeling in the pit of my stomach.
Nothing is set in stone yet and there's the possibility that his sister will clear as a cosigner.. but if that fails, then I'm not sure what I'll do. I trust my sister not to begrudge me if I was to say no to her; heck, she said as much on the phone earlier, stating unequivocally that she didn't want me to go ahead with this if it meant that I'd begrudge her for it. What makes me feel particularly badly about this is that I'm racked with all of this worries... I know that my sister would have zero hesitation in saying yes and doing whatever she needed to do to help me were the roles reversed.
posted by Raze2k at 8:00 AM on August 27, 2010
This situation has left me with a sick feeling in the pit of my stomach.
Nothing is set in stone yet and there's the possibility that his sister will clear as a cosigner.. but if that fails, then I'm not sure what I'll do. I trust my sister not to begrudge me if I was to say no to her; heck, she said as much on the phone earlier, stating unequivocally that she didn't want me to go ahead with this if it meant that I'd begrudge her for it. What makes me feel particularly badly about this is that I'm racked with all of this worries... I know that my sister would have zero hesitation in saying yes and doing whatever she needed to do to help me were the roles reversed.
posted by Raze2k at 8:00 AM on August 27, 2010
I think Mayor West is incorrect about the risks of double foreclosure. If the boyfriend returns the favor (which seems permissible though not necessarily beneficial if he has a big loan and little or negative equity), and then his house goes into foreclosure, the mortgagee can not simply foreclose on your house. If the boyfriend is on your deed, the mortgagee may sue and get a judgment resulting in a lean on your house though. If the boyfriend is not on the deed, he has no ownership rights or equity stake in your house regardless of being on the mortgage. Likewise, if you're not on his deed, you have no ownership rights or equity in his house despite being joint mortgagor.
So you need to be on his deed to protect your and your sister's interests, but you don't want him on your deed to protect your interests.
posted by McGuillicuddy at 8:01 AM on August 27, 2010 [1 favorite]
So you need to be on his deed to protect your and your sister's interests, but you don't want him on your deed to protect your interests.
posted by McGuillicuddy at 8:01 AM on August 27, 2010 [1 favorite]
Response by poster: Please folks, while I appreciate the feedback I do not appreciate some of the negative implications being foist upon my sister. She would only come to be as a last resort. She wants the house but doesn't want to sour our relationship either. Please keep that in mind. She has not guilt-tripped me or used any other tactics to sway my judgement.
posted by Raze2k at 8:03 AM on August 27, 2010
posted by Raze2k at 8:03 AM on August 27, 2010
I read somewhere recently that 70% to 75% of all co-signors end up owning the loan. Don't do it.
posted by Lone_Wolf at 8:09 AM on August 27, 2010 [1 favorite]
posted by Lone_Wolf at 8:09 AM on August 27, 2010 [1 favorite]
Ok well this is taking on a different dimension.
The issue is your own sense of guilt/need to fulfill some sort of indebtedness and your need to make your sister happy despite the clear and obvious obstacles, problems and major major issues as they present themselves.
You have repeatedly stated that you have humongous and absolutely glaring hesitations/reservations/fears with it, and yet, you still want to lie down on the train track to sacrifice yourself and your financial future for your sister. She's even telling you not to do it, and yet here you are. You are guilt tripping yourself.
Nothing we say or warn you about is going to make a difference in this until you reconcile your own internal needs to do this for your sister.
posted by jerseygirl at 8:11 AM on August 27, 2010 [5 favorites]
The issue is your own sense of guilt/need to fulfill some sort of indebtedness and your need to make your sister happy despite the clear and obvious obstacles, problems and major major issues as they present themselves.
You have repeatedly stated that you have humongous and absolutely glaring hesitations/reservations/fears with it, and yet, you still want to lie down on the train track to sacrifice yourself and your financial future for your sister. She's even telling you not to do it, and yet here you are. You are guilt tripping yourself.
Nothing we say or warn you about is going to make a difference in this until you reconcile your own internal needs to do this for your sister.
posted by jerseygirl at 8:11 AM on August 27, 2010 [5 favorites]
I said that I would be there for her if she needed me to be and asked me to. I'm not sure if I could walk that back without feeling even worse.
You CAN be there for her, just not by co-signing this mortgage. Just because someone wants something or has her heart set on it doesn't mean that she needs it. I get the feeling you're the type of person who puts others first. There are too many potential downsides to this for you to overlook. This is a case where the other person is just asking too much.
It sounds like she has other options (sister-in-law) or she can rent while she gets herself into better financial shape. You're renting, right? Why should you, who has worked hard to get her financial situation healthy, be tied to this potential mess when you don't even have something like that for yourself?
I also wonder about the fact that this is a boyfriend and girlfriend. Are they not marrying for a reason? If so, fine. But if its just because they aren't committed enough or ready yet to be married then why on earth would they get into a 30-year commitment by buying a house? DO NOT DO THIS.
posted by Bunglegirl at 8:15 AM on August 27, 2010
You CAN be there for her, just not by co-signing this mortgage. Just because someone wants something or has her heart set on it doesn't mean that she needs it. I get the feeling you're the type of person who puts others first. There are too many potential downsides to this for you to overlook. This is a case where the other person is just asking too much.
It sounds like she has other options (sister-in-law) or she can rent while she gets herself into better financial shape. You're renting, right? Why should you, who has worked hard to get her financial situation healthy, be tied to this potential mess when you don't even have something like that for yourself?
I also wonder about the fact that this is a boyfriend and girlfriend. Are they not marrying for a reason? If so, fine. But if its just because they aren't committed enough or ready yet to be married then why on earth would they get into a 30-year commitment by buying a house? DO NOT DO THIS.
posted by Bunglegirl at 8:15 AM on August 27, 2010
You may want to save this thread and look back on it when you end up in bankruptcy because it sounds like even with all of the good advice offered, you still feel like you need to co sign for your sister. You may feel close to her now and responsbile for helping her but if you co sign, not only will you end up bankrupt but all of the bad blood that develops between you should you move forward with this idea will probably end your relationship with her completely as it has done with so many other people in this situation. DONT DO IT!
posted by MsKim at 8:20 AM on August 27, 2010
posted by MsKim at 8:20 AM on August 27, 2010
So, if you feel you are indebted to your sister, it's hardly fair to do something that has good odds of ruining your relationship with your sister permanently.
Sometimes the right thing to do is difficult, and the wrong thing to do is easy.
posted by emilyw at 8:21 AM on August 27, 2010 [1 favorite]
Sometimes the right thing to do is difficult, and the wrong thing to do is easy.
posted by emilyw at 8:21 AM on August 27, 2010 [1 favorite]
If she isn't guilt-tripping you, then try not to feel guilty. Think of it this way: you can only help if you're actually in a position to help, and it doesn't sound like you are.
posted by thomas j wise at 8:23 AM on August 27, 2010 [1 favorite]
posted by thomas j wise at 8:23 AM on August 27, 2010 [1 favorite]
In reference to your second to last comment, I'll point out that I sympathize. If my sister asked me to co-sign for her, it would be a big decision, but I almost certainly would. All the naysayers be damned, sticking your neck out for family is honorable.
However, if my sister asked me to co-sign for her boyfriend, I'd have major reservations. It has nothing to do with thinking marriage makes relationships stable, I think marriage is generally bullshit, but it does make break-ups a more thoughtful decision and defines certain property rights in the event of divorce. You need to consult a lawyer before you go much further. Determine how you can protect your and your sister's interest in the home via the deed, binding contracts, and/or creating a legal trust. You can't make it risk free, but you can diminish what is a very risky proposition as currently proposed. Don't just trust her boyfriend to always be the great guy he is today.
posted by McGuillicuddy at 8:30 AM on August 27, 2010
However, if my sister asked me to co-sign for her boyfriend, I'd have major reservations. It has nothing to do with thinking marriage makes relationships stable, I think marriage is generally bullshit, but it does make break-ups a more thoughtful decision and defines certain property rights in the event of divorce. You need to consult a lawyer before you go much further. Determine how you can protect your and your sister's interest in the home via the deed, binding contracts, and/or creating a legal trust. You can't make it risk free, but you can diminish what is a very risky proposition as currently proposed. Don't just trust her boyfriend to always be the great guy he is today.
posted by McGuillicuddy at 8:30 AM on August 27, 2010
I know that my sister would have zero hesitation in saying yes and doing whatever she needed to do to help me were the roles reversed.
If that's true, then your sister is a fool. Good thing you'll never put her in that horrible situation, right?
Have you noticed how unanimously your question has been answered? A Metafilter chorus is shouting DO NOT DO THIS at you.
posted by gum at 8:38 AM on August 27, 2010 [1 favorite]
If that's true, then your sister is a fool. Good thing you'll never put her in that horrible situation, right?
Have you noticed how unanimously your question has been answered? A Metafilter chorus is shouting DO NOT DO THIS at you.
posted by gum at 8:38 AM on August 27, 2010 [1 favorite]
You wrote:
In the meantime, they are in a good position to rent, possibly a smaller place, using money saved for a downpayment. Lenders also look for a history of savings when making decisions.
If you co-sign, this money or risk comes at the expense of being able to secure a mortgage in your future.
Mayor West wrote:
You later wrote:
posted by SillyShepherd at 8:39 AM on August 27, 2010 [3 favorites]
Her boyfriend actually just started working about a year and a half ago after completing his schooling to become a physical therapist.Since the BF is a physical therapist, he'll have steady income which should help him in 3-5 years when he should be able to qualify for a mortgage. His job can't be sent overseas and there will always be a need for it. Since your sister has an income, and if she keeps her credit clean, she should be in pretty good shape by then, too.
...
What can I expect if I decide that I'd like to buy my own house in a couple of years? How badly could I be affected if they were to break up?
In the meantime, they are in a good position to rent, possibly a smaller place, using money saved for a downpayment. Lenders also look for a history of savings when making decisions.
If you co-sign, this money or risk comes at the expense of being able to secure a mortgage in your future.
Mayor West wrote:
Also, one other addendum: if you were do this, you'd lose all your first-time-homebuyer-program availability (which means the ability to put less than 20% down, and some interest rate advantages), because on paper, you're already a co-mortgagor of your sister's house.Not only this, but, because you won't be living there, it would be considered an investment property and you might not be able to deduct closing costs or interest when filing your taxes.
You later wrote:
This situation has left me with a sick feeling in the pit of my stomach.There's a lot to be said for listening to your gut feelings, plus you brought this to AskMeFi, because you need more clarification on this decision. It's probably the biggest financial decision one makes in a lifetime. It's not like buying a cheap used car. If you really want to help her out, there are ways you can do that without risking your own credit and livelihood. If you ware in good financial shape, you already owned your own home, and had no qualms about it, I'd say go for it.
posted by SillyShepherd at 8:39 AM on August 27, 2010 [3 favorites]
Leechblock's about to cut out MeFi for me, so I wanted to nth this sentiment:
You seem to love your sister a ton, and deeply value your relationship. This is the best reason NOT to co-sign a loan for her boyfriend to buy a house.
If you must, lend her money yourself (which you can afford to lose), or offer to cover the occasional payment (which you can afford to sink.)
(You say he and your sister are buying the house, however, when my husband and I bought and I was unable to be on the mortgage, the title was solely in his name. So it wouldn't even be her house!)
posted by endless_forms at 8:53 AM on August 27, 2010 [2 favorites]
You seem to love your sister a ton, and deeply value your relationship. This is the best reason NOT to co-sign a loan for her boyfriend to buy a house.
If you must, lend her money yourself (which you can afford to lose), or offer to cover the occasional payment (which you can afford to sink.)
(You say he and your sister are buying the house, however, when my husband and I bought and I was unable to be on the mortgage, the title was solely in his name. So it wouldn't even be her house!)
posted by endless_forms at 8:53 AM on August 27, 2010 [2 favorites]
I apologize for implying that your sister was being manipulative (even though sometimes people are subconsciously doing so that seems like not the case here). Since you say she will understand, I don't see any good reason for doing this. It is too risky. And not doing it does not diminish you or your feelings for her in the least.
posted by pointystick at 9:10 AM on August 27, 2010
posted by pointystick at 9:10 AM on August 27, 2010
Listen, I know you love your sister. But do you want to spend night awake, crying - many nights? Do you want the possibility of NOT BEING IN HER LIFE but still being responsible for a house you don't live in? Not seeing her future children grow up? Sure, then go do it.
I lie awake at night thinking about my inlaw's situation because it just breaks my heart, I can't imagine how they feel. They would've done anything for their kid, too. And now they're ruined. They could not get A $5K CAR LOAN because of this mess, and they'd had stellar credit before. They missed out on four years of their grandson's growing up.
She is not being made homeless if you refuse to help - that'd be a different situation. She's just not going to get the instant gratification she wants. Rationalize it any way you want, but the fact that her and her boyfriend are looking now when they CANNOT QUALIFY FOR A LOAN and have their heart set on a place does not indicate they are being the most mature about this . I'm sure she's a great person who wouldn't ever try to put you in a difficult position - but these positions happen sometimes organically.
You don't want your sister to be disappointed you can't help her, but she will get over it, and if she's as awesome as you say she'll be, she's not really going to be mad. Listen, the train is coming, and we're all telling you to get off the tracks. If you don't want to listen, you have only yourself to blame.
posted by kpht at 9:11 AM on August 27, 2010 [5 favorites]
I lie awake at night thinking about my inlaw's situation because it just breaks my heart, I can't imagine how they feel. They would've done anything for their kid, too. And now they're ruined. They could not get A $5K CAR LOAN because of this mess, and they'd had stellar credit before. They missed out on four years of their grandson's growing up.
She is not being made homeless if you refuse to help - that'd be a different situation. She's just not going to get the instant gratification she wants. Rationalize it any way you want, but the fact that her and her boyfriend are looking now when they CANNOT QUALIFY FOR A LOAN and have their heart set on a place does not indicate they are being the most mature about this . I'm sure she's a great person who wouldn't ever try to put you in a difficult position - but these positions happen sometimes organically.
You don't want your sister to be disappointed you can't help her, but she will get over it, and if she's as awesome as you say she'll be, she's not really going to be mad. Listen, the train is coming, and we're all telling you to get off the tracks. If you don't want to listen, you have only yourself to blame.
posted by kpht at 9:11 AM on August 27, 2010 [5 favorites]
I hope this whole thread will help you clarify what to do. This is the policy Mr. Sunny and I have adopted: We do not lend money to family members unless we can afford for it not to be paid back. This policy eliminates any anger or resentment on our part, and prevents the terrible ruination of valued relationships.
That does not mean we don't lend money, as we have provided funds for many things including tuition, car repairs, and house down payments. The amount we have been paid back is zero. There is just not as much motivation to pay back relatives, so we would love to be paid back, but it doesn't cause us grief if we are not. So, our relationships are maintained, and we can help without much guilt on either side.
posted by annsunny at 9:22 AM on August 27, 2010 [1 favorite]
That does not mean we don't lend money, as we have provided funds for many things including tuition, car repairs, and house down payments. The amount we have been paid back is zero. There is just not as much motivation to pay back relatives, so we would love to be paid back, but it doesn't cause us grief if we are not. So, our relationships are maintained, and we can help without much guilt on either side.
posted by annsunny at 9:22 AM on August 27, 2010 [1 favorite]
Another vote for NO.
Would a larger down payment remove need for cosigner (I don't know answer to that). If yes, then consider giving/lending $$$ toward down payment; at least that way your liability is strictly limited.
posted by Kevin S at 9:41 AM on August 27, 2010
Would a larger down payment remove need for cosigner (I don't know answer to that). If yes, then consider giving/lending $$$ toward down payment; at least that way your liability is strictly limited.
posted by Kevin S at 9:41 AM on August 27, 2010
sort of like annsunny said.
you would be making a wiser move to buy the house yourself and let them live in it for free.
don't cosign!
posted by HuronBob at 9:42 AM on August 27, 2010
you would be making a wiser move to buy the house yourself and let them live in it for free.
don't cosign!
posted by HuronBob at 9:42 AM on August 27, 2010
Simply tell her that you'd like to buy a place of your own someday, and you really need to save for it/not assume the risk of cosigning for a non-relative.
Forgive me for being blunt, but is the boyfriend the one floating the idea of you being a co-signer? Because, if so, that strikes me as being a very slimey thing to do, especially if they're not married or engaged.
Can someone even co-sign for a non-relative?
posted by SillyShepherd at 10:02 AM on August 27, 2010
Forgive me for being blunt, but is the boyfriend the one floating the idea of you being a co-signer? Because, if so, that strikes me as being a very slimey thing to do, especially if they're not married or engaged.
Can someone even co-sign for a non-relative?
posted by SillyShepherd at 10:02 AM on August 27, 2010
What makes me feel particularly badly about this is that I'm racked with all of this worries... I know that my sister would have zero hesitation in saying yes and doing whatever she needed to do to help me were the roles reversed.
If you had a mortgage and for whatever reason couldn't pay it anymore, would your sister continue paying it for you for 30 years until the house was paid off? Because this is what you are literally agreeing to do in a binding contract when you cosign on a mortgage. You and your sister might have an agreement that she is going to make all the payments, but the bank doesn't care about that and they will make your life miserable if for some reason your sister and her boyfriend default. The bottom line is that if you aren't comfortable accepting the responsibility for paying the loan, you should not be signing a contract that explicitly says you are responsible for paying the loan.
posted by burnmp3s at 10:11 AM on August 27, 2010
If you had a mortgage and for whatever reason couldn't pay it anymore, would your sister continue paying it for you for 30 years until the house was paid off? Because this is what you are literally agreeing to do in a binding contract when you cosign on a mortgage. You and your sister might have an agreement that she is going to make all the payments, but the bank doesn't care about that and they will make your life miserable if for some reason your sister and her boyfriend default. The bottom line is that if you aren't comfortable accepting the responsibility for paying the loan, you should not be signing a contract that explicitly says you are responsible for paying the loan.
posted by burnmp3s at 10:11 AM on August 27, 2010
@SillyShepard: Yeah, you can cosign for a non-relative although I'm sure it depends on the lender and circumstances. In another Cosigning Horror Story, I know someone (J) who was displaced by Katrina who lived in the spare room of someone he only knew through a setting somewhat like Metafilter. J was eternally grateful and felt incredibly indebted to this person for taking him in when he literally had nowhere to go, so when the friend asked J to cosign on some school loans, J did it.
J is now paying the entirety of the school loans. Another "surprise! this is the lender, your cosignee hasn't paid in 5 months" situation. That's another point: you quite often don't know things are going awry until they're already many months behind in payment.
I'm sure the OP just cannot fathom people being like this, up and not paying and leaving someone they care about on the hook. I can't fathom it either. But it happens, over and over again. And yet it's 100% preventable.
posted by kpht at 10:12 AM on August 27, 2010
J is now paying the entirety of the school loans. Another "surprise! this is the lender, your cosignee hasn't paid in 5 months" situation. That's another point: you quite often don't know things are going awry until they're already many months behind in payment.
I'm sure the OP just cannot fathom people being like this, up and not paying and leaving someone they care about on the hook. I can't fathom it either. But it happens, over and over again. And yet it's 100% preventable.
posted by kpht at 10:12 AM on August 27, 2010
Worst idea ever. Worst case scenario: your sister and brother-in-law both lose their jobs, and you have to either make all their mortgage payments, or let the default fall on your own credit score.
Banks check credit scores for a reason. I say this as someone with a terrible credit score. Your sister needs to spend a few years cleaning up her credit score (plenty of resources for that, both online and off) and try again.
posted by ErikaB at 11:05 AM on August 27, 2010
Banks check credit scores for a reason. I say this as someone with a terrible credit score. Your sister needs to spend a few years cleaning up her credit score (plenty of resources for that, both online and off) and try again.
posted by ErikaB at 11:05 AM on August 27, 2010
If a relative or friend asked me that right now, I'd have them plug some numbers into this NY Times buy-vs-rent calculator: Is It Better to Buy or Rent? There's this received wisdom that it's financially prudent to buy, and that's sometimes true, but not always. Debating which values to plug into the calculator is a good exercise, and let's someone put some realistic estimates on how much they might save/spend.
I'd also show them house pricing histories, such as: housing bubble
posted by at at 11:20 AM on August 27, 2010
I'd also show them house pricing histories, such as: housing bubble
posted by at at 11:20 AM on August 27, 2010
Okay, everyone else has said "DON'T CO-SIGN NO WAY STOP DANGER WILL ROBINSON!" and I agree. It's guaranteed to be a bottomless pit of suck that might well destroy your relationship with your sister as well as your own credit rating. SO DON'T.
What you can do to help your sister out:
- Help her shop around for financial advice. There are experts out there who make their life's work in advising people how to qualify for loans, etc. There might be an option for your sister to be able to buy that doesn't involve a co-signer. For instance, if your sister just needs a larger down payment, you can help her with that - yes, that's money out of your pocket but it won't involve you in the legal and financial hassles that cosigning will.
- If it turns out that it's co-signer or nothing, well, she needs to suck it up and rent for a few years while cleaning up her credit. This is where you can make a gift to your sister of a session with a financial planner, or Dave Ramsey's Financial Peace University (he's great and so many people swear by his advice) so that her credit is in tip-top shape a few years down the road. Or maybe you, your SO if you have one, your sister and her boyfriend can all take a financial planning class together and make it a family goal to have pristine credit in X number of years?
There are ways you can help your sister toward her goals and be a stand-up brother without putting your own finances and future in jeopardy.
posted by Rosie M. Banks at 11:25 AM on August 27, 2010 [3 favorites]
What you can do to help your sister out:
- Help her shop around for financial advice. There are experts out there who make their life's work in advising people how to qualify for loans, etc. There might be an option for your sister to be able to buy that doesn't involve a co-signer. For instance, if your sister just needs a larger down payment, you can help her with that - yes, that's money out of your pocket but it won't involve you in the legal and financial hassles that cosigning will.
- If it turns out that it's co-signer or nothing, well, she needs to suck it up and rent for a few years while cleaning up her credit. This is where you can make a gift to your sister of a session with a financial planner, or Dave Ramsey's Financial Peace University (he's great and so many people swear by his advice) so that her credit is in tip-top shape a few years down the road. Or maybe you, your SO if you have one, your sister and her boyfriend can all take a financial planning class together and make it a family goal to have pristine credit in X number of years?
There are ways you can help your sister toward her goals and be a stand-up brother without putting your own finances and future in jeopardy.
posted by Rosie M. Banks at 11:25 AM on August 27, 2010 [3 favorites]
It is incredibly hard to re-finance a mortgage into someone else's name even if they have excellent credit, money for the fees, and file all the correct paperwork. Banks seem to really not want you to do this. It takes a ton of time and effort (think weeks) to do it even under optimal conditions. It is much harder than buying or selling a house. Also, with lending standards being raised all the time, she could keep chasing an unobtainable standard.
posted by meepmeow at 12:23 PM on August 27, 2010
posted by meepmeow at 12:23 PM on August 27, 2010
If you cosign, YOU are responsible for the mortgageThe above is good advice. I've struck out an irrelevant phrase.if your sister and her boyfriend drop the ball.Can you afford to pay their mortgage, plus all your own expenses, without cramping your ability to live as you'd like to? No? Then don't do it.
Co-signing on a mortgage has nothing to do with someone else dropping the ball. It means you are liable for the entire mortgage payment, each month, every month.
Your sister or brother-in-law making a payment? Hypothetical. Don't count on it. You've committed to make every payment.
Refi in the future? Hypothetical. Don't count on it.
Your brother-in-law as a cosigner on your home loan at an unspecified point in the future? Separate transaction. Nothing to do with this. Totally irrelevant. Quit thinking about it.
Getting your name off the loan at an unspecified point in the future? That's not your decision, nor your sister's. It is the decision of the loaning bank. Look at it from their perspective: "Hmm, this person wants off the loan. If they default in the future, I won't be able to come after him. Benefit to me of letting him off my loan: none." Banks don't do this. Never going to happen. Completely ridiculous to even spend time thinking about it. Impossible. Forget about it.
at the same time I'm also incredibly indebted to my sister, who has been unyielding in her nurturing and support as I've grown up. I can't help but feel like an absolute jackass if I was to say no and prevent her from getting the house she's got her heart set on.
Wrong way to think about it. Try this:
"My sister wants me to give her the moon. I don't want to go get the moon - after all, that's impossible - but I feel that I have to go get it for her, because she has her heart set on it."
You wouldn't be thinking about that very long, because it doesn't make any sense. Sister doesn't get the moon. You let her down gently. You still have a sister who loves you.
Your sister's asking you to buy her a house. She doesn't understand that that's what she's asking, but now you understand that. Can you buy her a house? If so, that's your decision whether you want to do it. But I doubt that you can. Heck, you haven't even got a house of your own. (Let's not even talk about what happens when you try to go get your own home loan after being a co-signer on another home loan. Short version: you won't.)
If you think about how impossible it is to do what you're being asked to do, you should feel a little easier about not doing it.
posted by Protocols of the Elders of Sockpuppetry at 12:28 PM on August 27, 2010 [7 favorites]
If your sister and her boyfriend are good people, and if they truly understand what they are asking of you, they would never have asked. I'll take you at your word that they're good people, so it's likely that they really have no frigging clue what it would mean for you to co-sign on their mortgage... scratch that, on her boyfriend's mortgage.
Shit happens even to the most well-intentioned. I'm talking about your sister and her boyfriend here. They could each swear whole heartedly on their respective great grandmamas' graves that they won't screw you on this, and the fact remains that there are a plethora of awful things, beyond their control, that could befall them and result in you getting screwed. And these sorts of things happen all the time, even to good people, even to good people who are responsible with their money. Bottom line, they can't promise you anything.
And for your own sake, stop framing this favor... scratch that, fucking insane undertaking as something that defines your worth as a good person or good brother. This is not your sister's "last resort." She's not out on the streets, she just can't afford to buy her dream house. Hey, same here! Neither can you! It's not so bad, is it? And she loves you, she doesn't want you to feel like utter crap over this! So stop!
Rosie M. Banks absolutely has the right solution for all parties here. Since your sister has a history of mismanaging her finances, and has demonstrated an astounding lack of financial wisdom in the present instance, the best thing you can possibly do for her is help her get some financial education. It's no small thing, this is the kind of gift that could transform her life.
posted by keep it under cover at 12:51 PM on August 27, 2010 [3 favorites]
Shit happens even to the most well-intentioned. I'm talking about your sister and her boyfriend here. They could each swear whole heartedly on their respective great grandmamas' graves that they won't screw you on this, and the fact remains that there are a plethora of awful things, beyond their control, that could befall them and result in you getting screwed. And these sorts of things happen all the time, even to good people, even to good people who are responsible with their money. Bottom line, they can't promise you anything.
And for your own sake, stop framing this favor... scratch that, fucking insane undertaking as something that defines your worth as a good person or good brother. This is not your sister's "last resort." She's not out on the streets, she just can't afford to buy her dream house. Hey, same here! Neither can you! It's not so bad, is it? And she loves you, she doesn't want you to feel like utter crap over this! So stop!
Rosie M. Banks absolutely has the right solution for all parties here. Since your sister has a history of mismanaging her finances, and has demonstrated an astounding lack of financial wisdom in the present instance, the best thing you can possibly do for her is help her get some financial education. It's no small thing, this is the kind of gift that could transform her life.
posted by keep it under cover at 12:51 PM on August 27, 2010 [3 favorites]
Protocols of the Elders is exactly, 100% right. As the co-signer, you aren't merely the back-up plan. You ARE the plan.
posted by pecanpies at 1:57 PM on August 27, 2010
posted by pecanpies at 1:57 PM on August 27, 2010
Just want to chime in and say that you say your sister has only come to you about this as a last resort, because she is desperate, but unless there's something I'm really not understanding here she's desperate for something (a house) that she *wants*, not something she needs. If you cosigning would save her from homelessness or allow her to retain custody of her child or pay for surgery that she desperately needed that would be one thing, but that's not what's happening here.
You're considering taking on debt that will prevent you from owning your own home (something that it sounds like you would really like to do) so that your sister doesn't have to postpone her own plans for homeownership for two or three years. That sounds like a really bad idea to me.
posted by mskyle at 3:32 PM on August 27, 2010
You're considering taking on debt that will prevent you from owning your own home (something that it sounds like you would really like to do) so that your sister doesn't have to postpone her own plans for homeownership for two or three years. That sounds like a really bad idea to me.
posted by mskyle at 3:32 PM on August 27, 2010
> Since the BF is a physical therapist, he'll have steady income which should help him in 3-5 years when he should be able to qualify for a mortgage. His job can't be sent overseas and there will always be a need for it
I have a friend who's a physical therapist. He's good at his job, has years of experience and training, is an expert in his specialty, and came thisclose to losing his house last year. Clients had to cut back their own expenses, and physical therapy was easier to cut out than groceries or rent.
So please, don't presume that your sister's boyfriend will always be able to make the payments.
posted by The corpse in the library at 4:02 PM on August 27, 2010
I have a friend who's a physical therapist. He's good at his job, has years of experience and training, is an expert in his specialty, and came thisclose to losing his house last year. Clients had to cut back their own expenses, and physical therapy was easier to cut out than groceries or rent.
So please, don't presume that your sister's boyfriend will always be able to make the payments.
posted by The corpse in the library at 4:02 PM on August 27, 2010
Can someone even co-sign for a non-relative?
Yup. I used to work in collections and remember quite a few files where someone cosigned a loan for a friend and then got stuck with making the payments after the friend flaked.
posted by Lucinda at 6:50 PM on August 27, 2010
Yup. I used to work in collections and remember quite a few files where someone cosigned a loan for a friend and then got stuck with making the payments after the friend flaked.
posted by Lucinda at 6:50 PM on August 27, 2010
Response by poster: Well, the situation just exploded and years of pent up emotion resulted in her telling me never to speak to her again. She's fed up and hurt by my parents unwillingness to help her as well as repeated instances of me being hesitant to help her. She doesn't understand why family members would not bend over backward to do whatever they can to help... and she's unequivocally stated that this isn't about the mortgage with me; that it's been building up ever since we were children.
She's right in a lot of the things she said.
posted by Raze2k at 5:54 AM on September 21, 2010
She's right in a lot of the things she said.
posted by Raze2k at 5:54 AM on September 21, 2010
Huh. So much for all the stuff about "She wants the house but doesn't want to sour our relationship either." and "She has not guilt-tripped me or used any other tactics to sway my judgement."
What things has she said that she is right in, exactly?
Your sister has a sense of entitlement that is not uncommon in America, but is still incorrect. While everyone should have a place to live, people do not deserve to own a house. You have to earn that. You are not entitled to tie up someone else's financial security to fulfill your desires.
You can "help" your sister without sacrificing your entire future to do so. The fact that she wants you to do so is unreasonable. Remember, "If you are travelling with a child or someone who requires assistance, secure your mask on first, and then assist the other person."
Consider that someone who acts like this (throwing a tantrum and telling you never to contact them forever) when they don't get their way would have been a horrible person to co-sign a loan with. After you refusing to "help" her in some even more unreasonable way she might have decided to stop paying the loan and leave you responsible for it. You dodged a bullet.
posted by grouse at 7:05 AM on September 21, 2010 [1 favorite]
What things has she said that she is right in, exactly?
Your sister has a sense of entitlement that is not uncommon in America, but is still incorrect. While everyone should have a place to live, people do not deserve to own a house. You have to earn that. You are not entitled to tie up someone else's financial security to fulfill your desires.
You can "help" your sister without sacrificing your entire future to do so. The fact that she wants you to do so is unreasonable. Remember, "If you are travelling with a child or someone who requires assistance, secure your mask on first, and then assist the other person."
Consider that someone who acts like this (throwing a tantrum and telling you never to contact them forever) when they don't get their way would have been a horrible person to co-sign a loan with. After you refusing to "help" her in some even more unreasonable way she might have decided to stop paying the loan and leave you responsible for it. You dodged a bullet.
posted by grouse at 7:05 AM on September 21, 2010 [1 favorite]
Your sister is still trying to force you into doing what she wants, and she's playing dirty. I'm sorry you're being subjected to this, but good people sometimes treat other good people badly when they're upset. If you can feel some compassion for her then go ahead and embrace that, but the guilt you're flirting with is totally inappropriate. When she's willing to relate to you as a fellow adult, go ahead and share that new relationship with her. While she's flailing about, just give her some space.
Your sister's circumstance is not your fault or responsibility, and this is a case where your carrying her burden for her would only weaken both of you.
posted by jon1270 at 7:18 AM on September 21, 2010
Your sister's circumstance is not your fault or responsibility, and this is a case where your carrying her burden for her would only weaken both of you.
posted by jon1270 at 7:18 AM on September 21, 2010
She doesn't understand why family members would not bend over backward to do whatever they can to help
It's unfortunate that this is ending up creating a rift between you and your sister (though as you said there are apparently previous things that are part of it), but I'll reiterate that cosigning for a mortgage is not a normal thing that relatives should do for each other. Knowing the risks myself I would much rather, for instance, let a relative stay in my house rent-free and help them pay for their day-to-day expenses than sign up to be financially responsible for their mortgage. It is that big of a deal.
She is being unreasonable in expecting you to do this when clearly she and her boyfriend are doing well financially and will be able to buy a house themselves when her credit score and his work history improve. From your description she certainly does not seem to be in a situation where she desperately needs you to make a huge financial sacrifice for her, whether she understands how big of a commitment cosigning is or not. Relatives should try to be there for each other in times of need, but that does not give someone carte blanch to make unreasonable demands of relatives to get something they want. Hopefully she will understand this eventually and the two of you can work through your existing baggage without you having to sign over your financial life to a bank.
posted by burnmp3s at 9:30 AM on September 21, 2010 [1 favorite]
It's unfortunate that this is ending up creating a rift between you and your sister (though as you said there are apparently previous things that are part of it), but I'll reiterate that cosigning for a mortgage is not a normal thing that relatives should do for each other. Knowing the risks myself I would much rather, for instance, let a relative stay in my house rent-free and help them pay for their day-to-day expenses than sign up to be financially responsible for their mortgage. It is that big of a deal.
She is being unreasonable in expecting you to do this when clearly she and her boyfriend are doing well financially and will be able to buy a house themselves when her credit score and his work history improve. From your description she certainly does not seem to be in a situation where she desperately needs you to make a huge financial sacrifice for her, whether she understands how big of a commitment cosigning is or not. Relatives should try to be there for each other in times of need, but that does not give someone carte blanch to make unreasonable demands of relatives to get something they want. Hopefully she will understand this eventually and the two of you can work through your existing baggage without you having to sign over your financial life to a bank.
posted by burnmp3s at 9:30 AM on September 21, 2010 [1 favorite]
Well, the situation just exploded and years of pent up emotion resulted in her telling me never to speak to her again.
In this unfortunate situation, there is one silver lining: aren't you glad that you're not responsible for every payment on your sister's home loan?
Sorry this happened to you.
posted by Protocols of the Elders of Sockpuppetry at 9:37 AM on September 29, 2010 [1 favorite]
In this unfortunate situation, there is one silver lining: aren't you glad that you're not responsible for every payment on your sister's home loan?
Sorry this happened to you.
posted by Protocols of the Elders of Sockpuppetry at 9:37 AM on September 29, 2010 [1 favorite]
Response by poster: Thanks again for all of the feedback. The latest update on this situation is that my sister and I haven't spoken since September. Hopefully that will change for the better on Thanksgiving, but my expectations are low. That said, I'm going to mark this question resolved as its no longer pertinent.
posted by Raze2k at 5:41 AM on November 19, 2010
posted by Raze2k at 5:41 AM on November 19, 2010
« Older What is going on with this sleep button? | Where can I find two-column browser software? Newer »
This thread is closed to new comments.
If you cosign, YOU are responsible for the mortgage if your sister and her boyfriend drop the ball. Can you afford to pay their mortgage, plus all your own expenses, without cramping your ability to live as you'd like to? No? Then don't do it.
posted by jon1270 at 5:39 AM on August 27, 2010 [15 favorites]