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If my parents co-sign for my mortgage, does this mean they partially own my home?

Question by PC: If my parents co-sign for my mortgage, does this mean they partially own my home?
Or does this mean that if I default on my mortgage that the financial institution will go after my parents credit/finances to pay for the mortgage? I’m a little confused between the two.

Best answer:

Answer by FaZizzle
That means that if you default on the mortgage, they are just as responsible as you are.

Co-signing is really a bad idea–I’ve always been under the impression that in most cases if you can’t sign for it by yourself, you don’t need it.

Add your own answer in the comments!

 
19 Comments for this entry
lambchops5151
October 13, 2011
15:57

No, they have no ownership. You are correct about the rest of it.

Reply
Your Best Fiend
October 13, 2011
16:13

It means that if you default, then the lender will go after your parents. Heck, if you make a late payment, then they will come to your parents to pay.

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duce
October 13, 2011
17:00

Both, they own the house with you and if you default they will come after them

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emucompboy
October 13, 2011
17:42

> they partially own my home?
Nope. They’d have to get their names on the property title for that.

> does this mean that if I default on my mortgage that the financial institution will go after my parents credit/finances to pay for the mortgage?
Yup. Deep pockets, you know. Before you miss a payment, call your parents and get them to help you out.

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Uncle Pork
October 13, 2011
17:47

You hold the deed. However, if you default on the loan; your parents are responsible for the payment.

And your parents beat your ass when their credit rating goes down the shitter.

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Peatea
October 13, 2011
18:44

That means that if you default on your mortgage the institution will go after your parents, and your parents will be legally responsible for paying whatever is left to be paid if you can’t do it. Basically they are just a form of “insurance” for the institution that they will in fact get the payments no matter what.

Hope this helps. :-)

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P.I. Staker
October 13, 2011
19:12

Your parents will only co-own the house if their name is on the deed. If they co-sign the loan it means exactly what you said, they will be financially responsible for paying the loan and if it is unpaid the bank can go after them.

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Nancy Kay
October 13, 2011
20:03

No, they will have no ownership interest if they are not on the title deed, but you are right, if you default on your mortgage the financial institution will go after your parents credit/finances to pay for the mortgage.

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walletclan
October 13, 2011
20:43

It means you will get your parents into hot water if you can’t make the payments.

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Bill J
October 13, 2011
21:03

They do not have a property interest in the home unless their names are on the deed.

The mortgage lender has a security interest in the house (i.e., they can repossess it, sell it and use the proceeds to reduce or pay off your debt). The mortgage lender has the option to go after your folks if you miss a payment. Payments on something you don’t have SUCK.

This is why cosigning is so dangerous: a cosigner is saying “hey, Bank, I know you think they’re a bad risk…so I’ll let you come after me as well, even though I don’t get anything out of this.” Ask anyone who ever cosigned a car loan with a boyfriend-turned-deadbeat.

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chrisvet
October 13, 2011
21:54

Simple question, simple answer:

1. Co-signers only obligate themselves to make mortgage payments to the institution if the home owner (you) defaults.

2. Co-signers are different from co-owners. If your parents insist on being a co-owner, then you’re screwed, because its you who’se making all the payments, but they – who would be benifiting from 50% of the equity in your home, that You paid off. The only way you can fairly make them co-owners, is if they come up with 50% of the down payment (or whatever percent of the home you give them) , 50% of the closing costs, and 50% of the mortgage payments, utilities, and upkeep etc.

3. Little do your parents know, that once they co-sign a mortgage, even after you renew it (even with another bank 5 years down the road), there name is still on that mortgage as a co-signer – but they never have to sign anything.

Infact, a co-signer is obligated for the entire life of the original mortgage, regardless of what institution holds it.

So rest assured, you’ll be in 100 ownership of the home.

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keithkemp13
October 13, 2011
21:56

I actually process mortgage loans for a living.

No, they do not partially own your home, unless they are also on Title to your home. Alot of loans with co-signers at the closing of the loan, unless specifically requested, they will go on Title. This can be taken care of with a Quit-Clain deed, or a request for vesting on the property to be in your name only. This request must be done before you actually sign the loan documents. As once they are drawn up by the company providing your loan, if you wish to make any changes, the documents will usually have to be re-drawn, or partially redrawn.

The loan will show up on your parent’s credit report, as well as your’s. Missing a payment, will effect thier credit as well as yours. If you miss payments, the loan company will contact both you and your parents in an attempt to collect the debt. If you default, yes, they can/may go after your parents assets to pay the loan. If a foreclosure happens, it will effect both of your credits very negatively.

Hope this helps.

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Kayla
October 13, 2011
22:17

It all depends if they want to be on the deed for your home. You can work with the lender maybe have them work things out so that your home in your own.

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Franco
October 13, 2011
22:36

Co signing means the property is yours but they guarantee to pay on your behalf, if you default This means if you sink, they sink too. Better avoid it if you can.

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Zig
October 13, 2011
23:23

No. Whoever has their name registered on the deed at the court house owns the home. Your parents don’t own part of your house, they just have their names on the mortgage note. The deed and mortgage are two separate things. This means that your parents’ necks are stuck in a noose that the mortgage company can yank when you screw up and quit paying.

So there.

A lesson for you, don’t ever co-sign for anyone not even your kids. If you can’t get it together to get it, then you don’t deserve it.

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vazdis
October 13, 2011
23:36

at last cogradulations you got your foot in the door give your parents a pat on the back at the most you have a house if it comes to the worst you can rent it out

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ed m
October 14, 2011
00:29

no you will be the sole owner but i believe if you can not get the house on your own you should not try — it is time that you stand on you two feet — cause god forbid but if for some reason you lost your job or had a string of bad luck you could really put your folks in a bind — they raise you — now stand on your own two feet!!!

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tom
July 15, 2012
22:05

when parents have the name on the deed and they are backing up your mortagage and your wife and you dont get along just dont pay the mortgage and default on your parents who are the lenders and you just saved yourself the house value and appreciation of the home and prividing your parents are on your side you are safe

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Dennis
August 31, 2012
13:53

try work with your lender first. Give them a call and let them know about your siutation. In this housing market they might lose even more if they foreclose you so many of them are willing to work with you to help you pay off the mortgage and save your houseAll these mortgage got a department that help homeowner that is experiencing hardship just like you. usually it is call the loss mitigation department. Just give them a call and tell them your siutation and they will be willing to help you. Foreclosure and bankruptcy is the last thing you want

Reply

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