Exactly - it’s a one-way street. YB may have a problem getting his own mortgage, and I doubt OB will be financially re-established enough to help him with a cosign by then. “Younger” and “older” suggests no other siblings. Which brings us back to “where are the parents in all this?”
The only reason YB can cosign is because he is not financially bound to a mortgage himself yet.
Another thing not mentioned - where’s OB’s wife in all this? Presumably for a house, family, this implies they are still together - and nowadays, to afford a house, both spouses need to work. So is YB (and co-worker) expected to possibly cover a payment that would require two incomes, or is OB leaning on YB while his wife does not work? (I doubt that OB in this situation has a sufficiently well-paying job that the wife does not need to work?)
Quite a few years back I added a friend to one of my credit card accounts, with the understanding that she would reimburse me for any personal items she charged. (The primary reason for this was that she was helping care for my ailing wife, and there were times when it was easier for her to be able to do things like shopping without bringing my wife along.) Unfortunately, after a while she began charging personal items and taking her time reimbursing me, and eventually I had her taken off the card.
Shortly after I retired and moved away I got a phone call from her. She was in the process of buying a house and wanted me to co-sign for the mortgage. I can’t remember how long I laughed before hanging up.
Just want to say, I’m not intentionally ignoring recent comments/questions. My friend and my schedules only overlap on Fridays, so we haven’t spoken since I first posted.
Overall, I don’t know much more than what I already said about the family. Specifically I don’t know if the brother’s parents (or their respective wifes’ parents) are still alive/working/healthy/well-to-do or really anything about them. For sure YB’s wife’s parents are financially feckless and have always been. I also don’t know if there are other brothers or sisters in the Brother’s family.
Another possible aspect: given that OB is “mid 30’s” and we don’t know that the previous generation started having their kids while really young. It’s not at all impossible that age/retirement plans might play a factor. Are banks as, well, happy about accepting promises about a 30 year payment from someone who is pushing retirement age?
I got my last 30-year mortgage at age 54. Age was not a factor they seemed to care about. Then again the mortgage wasn’t big compared to my assets or then-current income.
If I was stretching and straining to just barely qualify, and I was 50-something, that might well have been a different story.
I cosigned for my mom when she got a mortgage, and she was well past retirement age, and then cosigned again when she refinanced it a few years later. I don’t remember exactly why I had to do that, though. It may have been due to age, or because her fixed income (social security plus pension) was too low, even though when adding in the mandatory distributions it was plenty.
I didn’t have any issues about her solvency, plus my brother and I are both on the title, and are the only beneficiaries. He and I will probably end up paying the mortgage at some point just due to the natural course of events.
Same here. 30 year mortgage at 56, refi at 58. Age not an issue at all.
OB doesn’t need a kidney, OB is trying to buy a house he cannot afford. Unless YB is able to qualify for two mortgages (the monthly payments on OB’s mortgage will count against YB’s monthly debt) OB is asking YB to give up any chance of buying his own house. If OB can’t qualify for his own mortgage now, it seems unlikely that he would be any help at all co-signing for YB’s hypothetical mortgage later.
ISTM that if you are cosigning a loan but not on the mortgage, that you should have a contract that at the vary least pays you back (with interest) as a lien or for every $X you pay you get Y% of the equity again as a lien.
I would think if the bank considers you a good risk - in 10 years, you will have paid down about 20% of the balance. So the risk that they would have to foreclose on an underwater mortgage and lose money if you are a reliable payer is pretty low. Worst case, they consider that somewhere around 75 to 90 you will sell and move, and by then the sale will cover the balance. the only thing they might ask someone older is what their income prospects and retirement plans are that they can continue to afford the payments.
Plus, with a cosigner - the more names on the paper, the less likely one single issue - job loss, sickness, etc. - will impact the repayment. Good for the bank, less so for any one person left holding the bag.
On the loan is “on the mortgage”. YB would be on the hook for any payments OB does not make as a party to the mortgage. What I think you are saying is whose name(s) on the title? When the purchase is made, title is transferred to a name (OB and wife?), and the mortgage is a lien - title cannot be transferred further without paying off the lien. The mortgage terms give the bank the right to foreclose if payments are not made (and for other conditions, like insurance).
In one scenario, OB defaults, YB is on the hook for monthly payments until the foreclosure goes through and the property is sold. If the bank ends up with a profit, that goes to the mortgage holder or does it go to the title holder? I guess the other question is whether the cosigner has any legal right to a share of that profit; presumably if this is just part of a string of financial trouble for OB, that profit may be grabbed by the company with a car loan overdue, back taxes, income tax, etc. YB may not see any of it, even if OB actually wants to give him money.
Bleh. We don’t write on the back of the deed here. My parents registered a mortgage on my house when they gave me a loan. They put their copy of the loan contract in their safety deposit box. They didn’t even take physical possession of the title deed.
Actually, title deeds are going the same way as cheques here. Physical possession of the deed is being phased out in my state.
That reminds me of something I did a while back. My parent’s credit rating had tanked and they needed to refinance a building. Originally they wanted me to cosign but I declined. Instead, I made them ‘authorized users’ on some of my credit cards. The cards get mailed to me so they have no access to my credit line. However, I have high credit limits, a healthy amount of spending on them and I haven’t carried a balance on any of them in almost 20 years. That was enough to get their credit bumped up high enough that they could proceed with the refi without any issues.
I did also make my (at the time, minor) daughter an authorized user as well in order to start building some credit for her too. In fact, I just bought her a car (paid in full) and, while I decided against it, I was originally planning to get a loan in her name, make payments for a few months and then pay it off. Again, just to help build up her credit. In a perfect world, when she’s ready for her first apartment (or new car or whatever) she’ll won’t need another signer.