314

That "something" you are signing means you are liable for the mortgage payments - yes, all of them - if he can't or won't pay at any point. The limit on what the bank will lend him based on his salary is there for a reason - they don't expect him to be able to keep up repayments if they lend him more (or more precisely, there's a big risk that he ...


181

What are the risks, if any The risks are exemplified by the outcomes presented on this website, including: What can I do when the co-signer hasn't paid anything on the house in 7 years and now they want money? How do I get myself out this disastrous situation What can I do as a co-signer? I signed on as the co-signer on a car loan and somehow ended up ...


74

To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, ...


73

A financial institution is not obligated to offer you a loan. They will only offer you a loan if they believe that they will make money off you. They use all the info available in order to determine if offering you a loan is profitable. In short, whether they offer you a loan, and the interest rate they charge for that loan, is based on a few things: How ...


65

I see your confusion: You're looking at the interest as if it applied to the whole loan balance. That's not what actually happens--the interest rate remains the same but as you pay down the loan the amount that you are paying interest on drops. That's what that chart really is showing--as the amount owed drops the interest drops and the amount that goes ...


52

Wrong way round. Transitional arrangements are non-binding guidelines that the lenders can observe if they choose to. The borrower - like your friend - doesn't get to choose whether to use them or not. Your friend obviously can't afford the property, so if you do this, all I can say is congratulations on buying your new house, and I hope you got a deal on ...


51

Your first sentence is written in a way that highlights a common misconception about how term loans work: Most mortgages use an amortization schedule that have you pay more interest than principal at the beginning Note the banks are not doing anything mischievous or playing with numbers in such a way to cause you to pay more interest up front than you ...


50

If you are truly preapproved (not just prequalified) then they are required to supply you with a Good Faith Estimate within 3 days. The interest rate will appear on that document. It's subject to change until you lock it in, but there's no reason they can't provide an estimate now. Source: Title 12 of the US Code of Federal Regulations Except as ...


46

If your goal is to save money, then make payments (of whatever size) as early as possible and don't wait. There is no benefit in paying it in large chunks. Think of it this way: Your interest is a monthly payment based on the total amount outstanding on the loan as of that month. Reducing that amount means you are paying for fewer months on whatever you ...


42

My credentials: I used to work on mortgages, about 5 years ago. I wasn't a loan officer (the salesman) or mortgage processor (the grunt who does the real work), but I reviewed their work fairly closely. So I'm not an absolute authority, but I have first-hand knowledge. Contrary to the accepted answer, yes the bank is obligated to offer you a loan - if you ...


41

It is highly unlikely that this would be approved by a mortgage underwriter. When the bank gives a loan with a security interest in a property (a lien), they are protected - if the borrower does not repay the loan, the property can be foreclosed on and sold, and the lender is made whole for the amount of the loan that was not repaid. When two parties ...


38

You should only loan money to friends or relatives if you are fully accepting the possibility of never ever getting that money back. And in this situation it can happen that you will be forced to give him a very large loan if something bad ever happens to him. (Paying the monthly rates instead of him and expecting he will someday pay it back to you is ...


36

If it was me, I would work on getting the collections debts cleaned up before anything else. When you get your tax refund checks, call them and offer them between .50 and .75 on the dollar. Write one check not make payment plans. Get it in writing that the debt is settled. Don't give them access to your checking account, and if you do use a CC, to pay ...


34

I highly suggest you read other posts that discuss the math of home buying. There's a lot of information and shared experiences of the total cost of ownership. I'd recommend buying the smallest home in an area you are happy with. Then, by all means, if you wish to pay the mortgage down in 10-15 year, or even less, do it. You'll be far better off in the ...


32

A mortgage is simply a loan backed by a property (and, because it's both very large and very common, covered by some specific laws). As such, the bank isn't an "investor" in your house; it simply is lending you money with the property as collateral. So, it doesn't get any share of the profit. As long as you sell the house on your own, for more than you ...


28

Assuming that both homes will appreciate in value at the same rate, and the real inflation-adjusted appreciation is non-negative, you will almost surely save money by buying the more expensive home first. Suppose all growth rates are 0%; prices are completely stagnant. Then, buying the starter house doubles the amount you pay in closing costs. This analysis ...


22

"Where to live" has too much of an impact on your entire life to make this a decision based purely on maximizing the financial outcome, or similar. If you truly expect you will be unsatisfied with your house in 5 years, consider whether the next 5 years will have lower quality of life if you instead buy a 'starter' home. If your 'dream home' will put ...


21

This is definitely strange. I've had a number of occasions where I've contacted a bank and asked what their interest rates were on one type of loan or another, and they've always been very willing to tell me -- always with caveats that those are today's rates and they can change by the time I actually get approved, may depend on age of the car or whatever ...


20

You are going to need a lawyer anyway so check with him. But here is a path you might be able to go down. Put the house in your name right from the get go. He gives you the money but you sign over a promissory note to him so that you net less than $14000 (gift tax annual exclusion for the calendar year). He can gift everyone in your household 14k per ...


19

I will expand on Bacon's comment. When you are married, and you acquire any kind of property, you automatically get a legal agreement. In most states that property is owned jointly and while there are exceptions that is the case most of the time. When you are unmarried, there is no such assumption of joint acquisition. While words might be said ...


18

tl;dr: I think you can find a much better deal. Doing a strait refi will cost you some amount of money. However, a 2.5% fee ont top of closing costs seems really high. You can get a quote from Quicken loans pretty quick and compare their fee. Also I would check with a local bank, preferably one you already do business with. The 2.5% is probably their ...


18

It is not so much that you are miscalculating, but that what you are calculating is not meaningful in the context you're trying to use it ("the annual rate of the loan"). You are essentially trying to compare apples with oranges. You have taken the total interest paid (over one or 20 years), expressed this as a fraction of the original loan amount, and then ...


17

It can be difficult when all your disposable income is spoken for. Your options depend on how good your credit is and how flexible your expenses are. I don't have all the answers without more details (possibly not then). However, couple of points of advice: Paying off that credit card debt (and not adding any more to it) is your #1 priority. You should ...


15

Just as a renter doesn't care what the landlord's mortgage is, the buyer of a house shouldn't care what the seller paid, what the current mortgage is, or any other details of the seller's finances. Two identical houses may be worth $400K. One still has a $450K loan, the other is mortgage free. You would qualify for the same value mortgage on both houses. ...


15

In my opinion you don't need to do much if anything differently. Keep on top of your payments and your credit score will improve over time (but is already quite good). If your cards have relatively low limits and are therefore frequently utilized highly, then it could be worth asking for increased limits to help keep your utilization down. Beyond that I ...


14

Okay, I'm just going to come right out and say this. Don't cosign this loan. Unless the difference in interest is very significant, this is all downside for you without much benefit for your girlfriend, unless your girlfriend has a will that leaves everything to you. Then it's just mostly downside for you. If you choose to ignore this advice, the minimum ...


14

Something else to consider, even if your friend is on the up and up and never misses a payment: Until the house is paid off, any time you apply for credit banks will count the mortgage payment on your friends house against your ability to pay all your existing debts in addition to whatever new loan you're applying for. If you're renting a home now, this ...


14

Why don't you just put your down payment on one of your credit cards? (Note: I'm not actually suggesting that you do this. Please read on.) There are a few reasons why you wouldn't (or couldn't) do this: The interest rates on the cards you have are very high. You don't have enough of a credit limit on any one of your cards for the down payment. These two ...


12

Well, he could negotiate with the bank to pay off the loan before the foreclosure takes effect. That would obviously cost him a large pile of cash but might remove the foreclosure, and possibly the late payments, from his record. But the real answer is that, having signed the note, he should have been making sure payments occurred so it never got close to ...


11

Lets consider what would happen if you invested $1500/mo plus $10k down in a property, or did the same in a low-cost index fund over the 30 year term that most mortgages take. The returns of either scenarios cannot be guaranteed, but there are long term analyses that shows the stock market can be expected to return about 7%, compounded yearly. This doesn't ...


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