will co-signing for someone take away my first time buyer benefits?

Asked by Richard, Mountain View, CA Tue Feb 17, 2009

a relative is asking me to co-sign for her, if I decided to buy a house of my own later am i a 1st time buyer or not anymore?

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10
David Blockh…, Agent, Los Altos, CA
Wed Feb 18, 2009
Richard,

A quitclaim doesn't relieve you of the financial obligation to pay off the loan, it just takes you off title (the worst case imaginable...no legal ability to do anything with the property, but financially liable).

Question - If she has stable income and cash reserves, why does she need you to co-sign. Something doesn't add up!

As far as hurting your chances to qualify as a first time home buyer, I don't know. I would suggest speaking with a qualified lender, real estate attorney or your CPA..
Web Reference:  http://www.losaltoshomes.com
1 vote
Marcy Moyer, Agent, Palo Alto, CA
Tue Feb 17, 2009
I totally agree with Gene. You should also speak with a lender to see how co-signing will affect your borrowing ability. If you are obligated for one loan you might not qualify to borrow for yourself.

Marcy
Web Reference:  http://www.marcymoyer.com
1 vote
Bob McClure, Other Pro, Walled Lake, MI
Thu Jul 16, 2009
hi...benny hit the nail on the head.....except it would be three years from owning a residential property......best regards...bob mcclure- success mortgage partners- plymouth, michigan...
0 votes
Benny Anasta…, , Santa Clara, CA
Thu Jul 16, 2009
Yes, co-signing for somebody does take away your benefits as a first time home-buyer.
Yes, you could be a first time home-buyer after 3 years without any mortgage.
0 votes
Eric Trailer, , Palo Alto, CA
Wed Feb 18, 2009
Sorry, the link to the IRS that I meant to provide you was:
http://www.irs.gov/publications/p17/ch37.html#en_US_publink1…
Kindst regards,
Eric
0 votes
Eric Trailer, , Palo Alto, CA
Wed Feb 18, 2009
Good afternoon Richard,
I have a couple of useful links for you to review to help you make an informed decision. First is a link to the summary of the '09 Stimulus package directly from the Senate Finance Committee:
http://finance.senate.gov/press/Bpress/2009press/prb021209.pdf
The second is a link to a page on the IRS that defines what a "First-time homebuyer" is:
http://finance.senate.gov/press/Bpress/2009press/prb021209.pdf
Based on what I have read here, it appears that, on its own, helping your relative may not negaitively impact a tax credit due when you buy your own home, especially given that it's likely that the purchase referenced is for investment property (if not, most loan programs do not allow income from "non-occupant co-borrowers" for qualification anyway..). However, Marcy makes a brilliant point that your qualifications will be affected by co-signing for any loan, and Dave makes another brilliant point that if your relative cannot qualify on his/her own, that you need to be prepared to keep the payments current or face consequences associated with delinquency.
Please feel free to call me at 650.543.8001 with any further questions.
Kindest regards,
Eric Trailer
0 votes
Plano, , Plano, TX
Wed Feb 18, 2009
Keep in mind I am not an attorney or IRS person, but from what I have read is that if your name has been associated (on title, mortgage, deed, etc) with any real property within 3 years, then you are not a first time buyer. BUT... thats just what I have read. Call the IRS, it's a long holding time but they will be able to answer your questions regarding any tax benefits!!
0 votes
Richard, Home Buyer, Mountain View, CA
Wed Feb 18, 2009
thank you for responding everyone.

i trust my relative that she's going to make the payment, she had a stable job, enough money and properties for back up. Also, she's going to take my name out through "QUITCLAIM" as soon as she can (3-6months), or as soon as the deal is closed. My concern is, does co-signing for someone makes me a 2nd time buyer when i decided to purchase a home for myself. She and her realtor said that my 1st time buyer benefits will not be affected, for the reason that i am not the "PRIMARY" buyer.

please advise.

richard
0 votes
David Blockh…, Agent, Los Altos, CA
Wed Feb 18, 2009
Richard,

Co-signing makes you legally responsible for that loan. If your relative doesn't make the payments, who do you think will have to make them? In short, you.

Sometime parents do this for their children (to give them a little help). But rarely is it a good idea if you don't already own. You might help your relative a purchase a home but at the expense of you obtaining one. I don't recommend it.
Web Reference:  http://www.losaltoshomes.com
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Feb 17, 2009
I agree with all

FYI - when you co-sign for a loan that amount is also included on YOUR CREDIT REPORT, this amount will increase your debt ratio to income. It COULD impede purchasing a home.

Have all investigated prior to agreeing with anything

GREAT QUESTION

http://www.lynn911.com
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