I am 20 years old, with 2 years of credit history and zero debt. I make around $18k per year, working retail. I’m the eldest child, living my mother, my step-dad, two younger sisters, and step-brother. Together my parents make around $120k after tax. We’ve been renting our current house for 5 years, and were recently informed that the owners will not be renewing our lease, and will be moving back in. There are not any houses for rent in our area that will house all of us. Which has led my parents to look into taking out a loan to purchase a home. The house they are trying to purchase is above $400k. My mom has good credit, but my step-dad has bad credit which has been negatively impacting their approval. Due to this my mom asked me if I could co-sign the loan since I have “good credit” just to get the application approved, and that I could be taken off after a year. I told her no. A couple days later she asked again, and isn’t giving me much of a choice, saying that it isn’t like my younger sister (just turned 18) and I can afford to live on our own. And even if I did try to co-sign I don’t think it’ll get approved as I only have two years of credit history, with a 5k credit limit. I don’t really know what to do, and would love any advice. I don’t want my parents to see this so I’ll probably delete this at some point. Thanks for reading.
I’m being asked to co-sign for my parents mortgage.
byu/Impressive_Rule806 inpersonalfinance
Posted by Impressive_Rule806
29 Comments
Don’t co-sign. If you need an explanation read the 100’s of posts on here on the same topic.
Are you prepared to be responsible for the full mortgage payments if (when?) your parents fail to pay them?
There’s a reason why your step dad has bad credit. It’s because he’s bad at making payments that he agreed to make when he was supposed to make them. If your step dad couldn’t keep up with his payments in the past, he’s unlikely to keep up with payments now and in the future. That’s the whole point of having a “credit score.”
Your income is so low you’re not worth anything on a loan application for a mortgage that large
The answer is still no. Please stick to you position. Do NOT sign. If need be, prepare to move out. Seriously. Being homeless almost better than cosigning a mortgage you cannot possibly afford.
It’s for your parents to find a place *to rent* that they can afford.
Do not do this. You will have to pay the mortgage if they ever can not. Plus it will make it harder for you to get your own mortgage in the future.
I know it is hard for you to say no because they’re your parents but you really should not co-sign their mortgage.
EDIT!!
If they can’t get approved without you now, I doubt they could refinance the loan in a year to remove you. That would cost additional money.
Banks never remove people from mortgages.
Never co-sign anything. If people can’t afford something on their own they can’t afford it full stop
You will not get approved as a co-signer for a $400k home making $18k per year. The co-signer has to be able to cover the entire loan with their credit.
Do not sign! Your parents financial failures are not your responsibility. Tell then to eff off.
On top of what others have said, if you co sign, this mortgage will always effect your debt to income ratio if you ever need a loan in the future and make it near impossible for you to buy a home yourself while this loan is active unless your planning on making 200k a year.
Don’t let them guilt you, avoid doing this
Do not do this. It will keep you from being able to get a mortgage yourself one day since it will be a 30 year mortgage. They will need to rent somewhere else until your stepfather can improve his credit. They will not be able to take you off in a year. They la need to move to a different area if they can’t afford to rent a home in their current neighborhood.
Do not co-sign. If your parents do not make the payments, they will come after you for it. It will ruin what little good credit you have.
Your parents should get pre-approved for a mortgage without you as a co-signer. That will tell them how much they qualify for on your Mother’s income alone. Looking at 400k+ houses is a stretch on her income. Is there any money in savings? Banks will look at that too. They look for reserves as a way to potentially make mortgage payments in the event of job loss.
Is she going to put you on the deed as a co-owner?
Absolutely not. If they can’t be approved on their own, they need to find a far less expensive house.
And at 20, if you’re not in school, making $18K a year is never going to put you into a position of living on your own.
I don’t think having you as a co-signer makes a difference. They want someone to make the payment when your mother can’t do it. They probably wouldn’t think you can do it either since you only make $18K a year.
Please, freeze your credit now in case they try to do this without you. They would probably be able to unfreeze it themselves, but that would add another crime to the list. Doing this without your permission would be a federal crime. Adding you as a cosigner would be almost useless to them anyway, but it’s very dangerous for you. You could become liable for their entire mortgage if they fail to pay. This could mess you up for life. Do not do this. If they try to force you, get a lawyer. Probably best to start talking to lawyers now and definitely start saving up as much money as you can in a bank account they don’t have access to in case they throw you out.
Just jumping in to respond to a point that others haven’t yet from your post. Your mom cannot simply take you off in a year, she would have to go through the entire refinance process. Therefore requiring her to qualify on her own then, plus interest rates would have needed to go down not up otherwise payment grows, plus she’d most often still have to pay several thousands of dollars on a $400k home given the size of the loan I’m imagining she’d need with a limited down payment, as a refi fee.
Don’t do this OP. This is classic manipulation. You may need to look into moving out unfortunately. I’m sorry.
Don’t do it
Also you’re worthless as a co-signer
You likely have next to no credit history and barely any income .
Go into a bank and try to get approval for a 300,000 house , they’ll literally tell you the exact same thing
Lenders like to see < 36% debt to income ratio. A 400K mortgage? 10K/mo after taxes is right about at 36%, any other debt?
If they need a 20YO to co-sign, they can’t afford it. This will mess up your credit for decades. You may never be able to buy a house on your own (banks aren’t going to let you have a mortgage on two houses).
I know this is tough to hear, but: Your parents are deadbeats. I’m sure you love them, but don’t keep enabling their reckless behavior.
Do not co-sign loans. Ever. For anyone.
They either need to save more of a down payment or find a less expensive house. Your mom should be able to apply for a loan by herself without your step-dad. There are online calculators she can use to figure out what will be affordable for them.
This is a good one: [https://yourhome.fanniemae.com/calculators-tools/mortgage-affordability-calculator](https://yourhome.fanniemae.com/calculators-tools/mortgage-affordability-calculator)
If they keep insisting on you cosigning, you should consider moving out. Start asking around for someone who needs a roommate.
Absolutely not. And you do have a choice -she cannot actually force you. Don’t argue. But you may find an article about why young people shouldn’t cosign their parents loans. Cosigning means you’re on the hook for the full loan. Being part of a mortgage should only happen between people who are married (or have completed substantial paperwork with a lawyer to delineate alternative mutual obligations … maybe). In your current stage of life and economic situation, it’s nowhere near a reasonable thing to do. (It’s probably time to move out. Find a room with housemates you can afford. And think about planning out your next step to increase your income and independence I the mid to long run. )
You cannot control your parents either. If she asks you for something that is unreasonable and a bad idea and your relationship gets destroyed over it there’s nothing you can do to ensure it we won’t happen.
Learning to say no, with grace and firmness, is a critically important skill.
My mother asked me the same thing when I was in my early 20s I declined. She was pissed but it was the right move for me. Im a small time landlord now. I would not have had the same trajectory if I co-signed and had that hanging over my head. DO NOT DO IT
No. This will mess up your chance of owning a home for the next 30 years. If they lose their jobs or don’t pay your screwed.
On top of the other reasons given in this comment section you will lose out on any first time home buyers grants when it’s time for you to buy your own home.
It is not your responsibility to help your parents get a mortgage. It’s awful of them to ask you to do this. You do not want to be entangled with their poor financial decisions until you are 50. Don’t do it.
I co signed for my parents when I was 18. The had lost all their assets and were unable to get a loan but we needed a home to live in. They had a very small amount for a deposit that they could use. We had that home for over 20 years. I trusted my parents to make good decisions which they did. It’s not always a negative thing. You have to comfortable w who they are
dont do it and tell your sister not to do it either. this could ruin her credit for life if they can’t afford to pay the mortgage it will fall on you.
Your parents can’t even afford to 400k home. Don’t budge on this. If anything tell them you should all go meet with a financial advisor 1st and let him tell it like it is.
ABSOLUTELY NOT. Do not do this under any circumstances.