Considering Co-Signing a Family Member’s Mortgage?

When you agree to co-sign on a mortgage, you are essentially lending a portion of your future income and credit score to help your family member get a mortgage loan. Before you ever sign on the dotted line, you should consider every detail of the terms and your potential exit strategy. Take a look at these facts you should consider before co-signing on a mortgage for your family member.

Their Choices Shape Your Future
Say you helped your aunt purchase a home a few years ago by co-signing for her. She has recently lost her job and hasn’t been able to make house payments, resulting in a mark on her credit report. Do you know that this delinquency will also show up on your credit report as well? As a co-signer, you have just as much obligation on the liability as your aunt does. While it is their responsibility to make payments on time, you have co-signed and ultimately meaning the mortgage note is 50/50.

You are Connected
Is this a family member that you have a strong relationship with? Because, as long as there is a mortgage on the home, you will be conjoined with this person. You need to consider that in order for your name to be off the mortgage, the person who you co-signed for will have to pay off the mortgage by refinancing you off the mortgage, or by selling the home, which pays off the mortgage. You can’t simply say, “Sorry, I don’t want to do this anymore.”

Your Borrowing Power is Reduced
Are you yourself planning to buy a new home? Your ability to take out another mortgage, another credit card, or another car not will be affected depending on how much of your income and liabilities are being used for the person you have co-signed for. By co-signing for someone else’s mortgage, you reduce your chances of qualifying for future loans and credit obligations?

Ensure that You Understand What Co-Signing Really Means
By co-signing on a mortgage, you are applying for credit through your supply of income, credit score, payment liabilities and assets to procure credit, that is, a home loan. Many people co-sign for family members or friends to ensure that they receive their mortgage loan without knowing what co-signing fully entails and what it does for long-term prospects of obtaining credit in the future and maintaining a healthy credit score.

When a family member asks you about co-signing on their mortgage, make sure that you consider these four things before making your final decision. If you don’t feel comfortable placing a portion of your income and your credit score on the line to co-sign on a family member’s mortgage, it’s best to say no. Once you have co-signed, it is not easy to remove yourself from the mortgage – so don’t take the decision lightly. A better option, if you can afford it, might be to simply make a gift or loan to your relative. You could still lose the money, but won’t take such a hit if things go bad.

Don’t go at this process alone, give me a call today so I can help you sort out your specific situation.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at

papers are on a table and being signed with another pair of hands off to the right