Financing in Chicago>Question Details

Damien Samuel,  in 60640

Can parents co-sign a loan?

Asked by Damien Samuel, 60640 Mon Mar 10, 2008

Before you jump down my back... here's the situation. I begin work in September, but am moving to Chicago in May. I already have a position come September, with a set salary which will be more than enough to qualify me for the loan. But the lender won't allow a closing until I have my first paycheck. My parents have strong financials, and could possibly co-sign a loan. I realize they would be liable for the debt, but what other rights or obligations would this lead to? Would they simply be able to deed the property over to us? I'm not very familiar with these arrangements, so any further info would be helpful.

Also, sometimes my questions turn into a conversation as to whether I should rent or own. I've already been down that road, and am deciding to buy. The option would be ths type of arrangement, or a land contract with a delayed closing. Just wanted to stop this thread from going on a tangeant... :)

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3
Sure your parents could co-sign. My mom co-signed on one of my early purchases.

Check with an accountant and lawyer on some of the ramifications. The main one, of course, is that if you default, they have the right to come after your parents. Another consideration is that they'll remain on the mortgage. They may be able to deed their interest in the property over to you, but that won't release them from their mortgage obligations. The only way you'll be able to do that is by refinancing.

One other possibility is delaying the purchase until after September, when you are drawing the salary that'll qualify you on your own.

Hope that helps.
1 vote Thank Flag Link Mon Mar 10, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Daniel,

You're from Durham, right.?

I'm sure they can co-sign .. but why put your parents under the gun..?

Move to Chicago in May - and rent ... start your new job in September and see if you even like it - (or your job likes you) .. come spring you'll have 20 or 30 homes or condo's that you've researched, you'll know the market and the city and you'll be prepared to do it all by yourself... sound fair.?

Many things can happen being in a new city and starting in a new career .. the last thing you'd want to happen is having your parents paying for you ~ twice ...

The courts are littered with loving parents trying to get back pennies on the dollar because of children that wanted something yesterday - but couldn't wait until tomorrow ...


:^)

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0 votes Thank Flag Link Mon Mar 10, 2008
Why would anyone jump down your throat? Your parents can absolutely co-sign for you. Since you pretty much understand if you do not pay, then they are liable. You are not required to have them sign the deed, but you probably should. Then when the time comes and you can make the payments on time, they can just sign a quit claim deed, which means they give up ownership and rights to the property.

Good luck in your home search!
Ida McCarthy
Broker
Sherwood Realty
Web Reference: http://www.idamccarthy.com
0 votes Thank Flag Link Mon Mar 10, 2008
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