Question by chEeZ: Advice on loan application?
i need to pull out a loan to help my mother lower her interest rate, though i myself do not have a house; though with my income and her income combined we “will” approve for the loan. My question is, should I be the primary or should she be the primary? And how will that benefit me and my wife getting a home when the time comes?
Best answer:
Answer by Lauren F
Cosigning on a loan is a deeply important decision. Make sure you understand exactly what you are getting into here. If you cosign, the bank will consider you both equally responsible for paying the loan. If your mom defaults, they can and will come after you for payment.
Even if your mom doesn’t default, being listed as a cosigner will hurt your ability to get a loan. Why? Well, any bank you apply to for a mortgage will know about this loan and will base their decision on whether or not you can afford to pay both loans in the event your mom defaults.
So, unless you have a very big income, or this loan for your mom will be paid before you want to buy a house, it is not likely that you will get a mortgage.
However, despite these warnings, if you still want to do this, make your mom the primary borrower. That way if it is for something that is tax deductible she can deduct it off of her taxes.
Tread carefully – it is a big commitment.
Good luck.
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