Question: Should i cosign a refinanced mortgage with father in law when i have bad credit?

(Posted by: Daisy A on 2008-08-12 09:15:20)

We live in CA. I live with my father in law and we are in need to apply for refinance w/ cash out. However, he is retired, has excellent credit, but only makes about $50k a year with combined pensions and social security. The bank was only willing to give him $350k and we actually need $390k. They said the only way they'd allow him the $390k is if I cosign. I have terrible terrible credit (a couple of car repos, late payments, behind on taxes, etc...). The bank told him they would just really like my income there (I make $60k a year), but I'm afraid if I cosign for him, it would only hurt his chances for a loan. By the way the house is worth about $550k in the current market. Thanks for your feedback. We live in CA. I live with my father in law and we are in need to apply for refinance w/ cash out. However, he is retired, has excellent credit, but only makes about $50k a year with combined pensions and social security. The bank was only willing to give him $350k and we actually need $390k. They said the only way they'd allow him the $390k is if I cosign. I have terrible terrible credit (a couple of car repos, late payments, behind on taxes, etc...). The bank told him they would just really like my income there (I make $60k a year), but I'm afraid if I cosign for him, it would only hurt his chances for a loan. By the way the house is worth about $550k in the current market. Thanks for your feedback eta: Thanks for the replies. Another question. I really don't want to explain my situation to him unless I really need to. Can the bank(s) discuss my information with him without my consent?

Posted by: SPIFIMAN1 on 2008-08-12, 09:43:49

Did anyone actually read this question? They are looking for a refinance with cash bank not a purchase so down payment is not even a factor. Since you have bad credit the bank will not be able to make a decision on the loan until you actually apply and since you father in-law has already been turned down you have nothing to lose. Now one of the other posters did point out something you have to take into consideration, if your name is going to be on the title and you have creditors coming after you for the repossessions or back taxes they can take you to court, get a judgment and file a lien on the home. They can't take it but they can force you to pay them back out of any profits if you sell it.

Posted by: Anjell on 2008-08-12, 09:21:47

Don't do it...you have bad credit so you're not helping. Perhaps you could loan him some money since you have good income. He can use it to increase the down payment and then ultimately doesn't need to borrow as much.

Posted by: B on 2008-08-12, 09:23:23

If you have bad credit that may not even be an option for you. They say that until they pull it and then see whats on your credit, but either way it probably wouldnt hurt him. All they can say is yes or no and then he can try with someone else.

Posted by: Bob C on 2008-08-12, 09:31:14

Cosigning doesn't hurt his chances for the loan if he can't already get one. Nothing you can do will make it worse. However, it is possible that you won't make it better either. If they can't do the loan then they can't do the loan. However a potential problem could occur later. Typically, when you are on the loan, you are also on the title. If you get sued by one of your creditors, then they could place a lien on the house. This essentially makes your father-in-law responsible for your debt. Finally, the current real estate market sucks. If you can't be on the loan, talk to the seller about reducing the price of the house to something your father-in-law can afford. If the seller is motivated and has no other options, this might actually happen. Ironically, the fact that you can't help him with the loan might actually help him get a lower price. If they don't lower the price your father-in-law can't lose what he doesn't have. Therefore, he will not be in worse shape.

Posted by: Doctor Deth on 2008-08-12, 09:56:55

If he only makes 50k, then a 390k loan is way more than he can afford and you could be stuck somewhere down the line paying the loan if you co-sign and it would be too big of a loan for you to handle by yourself, also - plus,since you have a lower score that will affect the rate you'll be getting on the loan