Co-signing on a mortgage on a house I'm already on the title for.

Factual Questions
1

My father owns a townhouse.Apparently he put myself and my sister’s names on the title so it won’t have to go through probate. There’s an existing mortgage on the house. Today he approached me about wanting to refinance it, and wanted me to cosign the mortgage.

What are the potential ramification of this, considering my names on the property already so I assume I’m already responsible for for it in a way? How would things work if there are any creditors against his estate when he passes. (Earlier I posted there was a judgment against him, but I found out that was discharged through bankruptcy).

2

If your name is already on it, but you didn’t actually sign anything, I’m guessing you’re not actually responsible for it, simply one of the owners, but I don’t have my mortgage contract nearby to see if that’s any type of option.

Co-signing will come with quite a few possible ramifications…
1)When he dies, you’ll have to take over the payments and/or sell it.
2)If he’s late on a payment, you’re one of the people that will get a phone call, end up in collections and/or take a credit hit.
3)If he decides to stop making payments, you should be ready to cover them.
4)I’m not sure about this one, but I’m guessing any lien against the house could cause a problem for you as well.
Construction liens are nasty business and, IMO, should be illegal. But you’d hate to end up with a judgement against you because the roofers didn’t pay the shingle vendors. It’s not uncommon for people to pay for construction jobs twice because they didn’t get a lien release.
5)It will end up on your credit. That’s not a bad thing if you don’t already have a house payment or a lot of debt/credit AND he does a good job paying his bills. However, if any of those things aren’t true (ie he doesn’t make his payments on time, you already have a high debt/income ratio etc), your credit score will likely take a hit.
It’s also very possible that, even if he does a perfect job making his payments, you could be turned down for any large loans (house, car) because you’ll have all that extra debt.
If he found a way to add your name to the mortgage in some way that you’re not actually a cosigner, but that the condo will go to you when he dies, my question is why he wants you to co-sign now.
Wait…I see your last sentence now. I’m guessing that because he declared bankruptcy they won’t let him refi because his credit is so bad.

If I was in your situation, I’d ask myself if it’s worth co-signing at the risk of ruining your credit. It may be, you may have your reasons. But you should’t feel bad about telling him that you don’t want to take the risk and if he can’t refi on his own he needs to look into selling it and moving to an apartment.

One last thing, if you do this (and I’ve done similar things), you need to make sure you have access to the mortgage bill (online, paper copy mailed to you) and every month check to make sure it’s current. Be prepared to cover any payments that he doesn’t make on time.

3

you know if he did declare bankruptcy he might of put your name on it so he wouldn’t lose it and is trying to pull something over on the bank which might leave you holding the empty bag eventually

id be wary ……

4

Other than my kids (maybe) I can’t think of any of my family that I would take this risk with. My family are singularly deadbeats about making their payments. Nope not gonna.
OP be very afraid, IMHO.

5

If he’s bankrupt, and refi’d the place, how much equity could there be? What’s to inherit, beyond a financial obligation and a mess to clean up?

I’d be asking him to remove my name and refuse to co-sign, it seems a certain disaster ahead to me.

Good Luck!

6

So wait, he put your name on the title for free? And you’re worried about what exactly, that your father will do something to jeopardize your free third of a house that he gave you for nothing? If your name is on the title I suspect he can’t refinance it without your signature, because you have an ownership interest in the property used as security. If it’s in a non-recourse state all you can lose is the mortgaged property, which from what you said in the OP you don’t have a nickel in.

7

He hasn’t already refinanced - he wants to and can’t without the OP cosigning on the new mortgage. The real problem has nothing to do with creditors when the father passes away* - the issue of the father not paying while he’s still alive is the real problem. In that case, the OP and his sister will either have to pay the mortgage or have face all the consequences for not paying that any borrower does. ( like a hit to their credit rating, collection attempts)

  • That will depend the type of debt - if the debt is the father’s personal debt, unconnected to the house, the OP’s own money will not be at risk. The house might have to be sold , and the father’s share of the proceeds paid to the creditor(s) but that’s it.
8
  • Your father still owes on the original mortgage.
  • Your father went bankrupt recently due to his bills.
  • Now your father wants to get another mortgage on this townhouse.
  • the bank won’t do this unless your father gets a co-signer.

I’d say the bank is better able to assess your father’s credit-worthiness than you are. And the bank finds it lacking. You should take the hint and decline also. Unless you want to do this as a gift to him.

9

The only gift so far is the fact that the OP has received a 1/3 interest in a townhouse for free. Mdcastle’s name along with that of his/her sister was placed on the title in exchange for; as best as I can determine, nothing at all. The bank needs the signatures of all of the property owners to secure the mortgage. I think Mdcastle has misstated the bank’s request, he/she is not a co-signer, he/she is a mortgagor.

See, this is why I’d lose a limb before I’d put someone’s name on a title without compensation. You give people 1/3 interest in whatever equity you have in something and they right away start to figure how they can chisel the rest of it out of you.

10

I don’t think the op is looking to rip off his dad

I think the dads trying to get the refinanced mortgage and leave someone else on the hook for it and the only reason the ops name is on it was to keep the bank from taking it the first time

Because as someone else said what makes this time different from the time he had to go bankrupt?

because to me unless he has a bunch of money because he doesn’t have to pay the other bills that’s now discharged is the only way he can pay for it and if that was the case what’s the point of the whole exercise ? maybe they reappraised the house and lot and its not worth as much now is the only legit reason I can think of

11

Sounds like Dad may have added you to the title, less so you’ll inherit any equity (which could be zero after refi), and mostly so you’ll feel obliged to do the co sign.

Where is the incentive for Dad to make any payments once you’ve co-signed? And what will be your recourse if he’s unable to make the payments? Put him out and sell the place? You really up to that? Or take over making the payments? You sure you can manage that? Can you handle the utilities too? Because he could just as easy stop paying them too.

12

How is it that most posters in this thread assume the co-sign is because of the OP’s dad’s credit score.
This is the only post that nails it IMO:

13

Some may have assumed that- but the potential problems for the OP are the same whether s/he’s an additional mortgagor or an actual cosigner. If Dad doesn’t pay , OP and sister are just as responsible for making payments whether they are additional mortgagors or co-signors. The only difference is that if they are co-mortgagors , they own 2/3 of the house once they pay it off. If they weren’t on the deed and were merely co-signers, Dad would still own the entire house after OP and sister paid it off.

14

True the results and ramifications are the same. Just the reason for it isn’t. Without knowing OPs or dad’s financial situation it is difficult to know all the issues that could arise.

15

It seems to me there are simply way, way too many variables for strangers on the internet to be able to make any useful advice. Like:

How old is the OP and his father?

What does your sister think of this? (I’m assuming your father asked her to cosign, too.)

How is the OP himself getting along? How comfortably off is the OP? Is he married, does his spouse have a good income – and how does s/he feel about this? Children? Does he have his own house/mortgage or will need his credit to buy soonish? Can he pay off the new loan PLUS the demands of his own life if need be?

Is his father still employed and in decent health, as in, has the capability to pay off a new loan? Or is the OP likely to need to help cover expenses in assisted living?

Is this house in good condition and a good location, as in, likely to be able to sell quickly if necessary?

What is going to happen to father if you don’t sign? Can he pay his regular bills? Would he end up having to move in with you or end up in the streets?

On and on.

Note: I don’t expect you to answer any of this, just things that could majorly affect what the ‘right’ decision for you is.

It seems to me that a consultation with a lawyer is step one. What really ARE the legal implications of being on that deed and/or cosigning. Get hold of copies of the paperwork to take with you.

And if that don’t shut the door already, then find a financial consultant.

Yeah, they’ll cost you some time and money, but you need good, professional advice before you find yourself knee-deep in the alligators if they’re lurking.