Helping With Your Child's Mortgage
When your children get older, it is understandable that you really want to help them as much as possible. When it comes time for them to buy a home, should you help by cosigning the mortgage? This can be a very tricky thing that can be very good or not be so good. So what is best for both you and your child? Well, it depends on what you want your role to be.
What Are the Terms of the Mortgage?
The reason you are cosigning a mortgage is because this is something that a lender will probably not do. This means the buyer did not meet all of the important criteria. If they did meet the criteria, then the lender would not require a cosigner. This is someone who would assume the responsibility in the event the original buyer cannot come through.
Make sure you are familiar with what both you and your child are getting into. Know the terms and how all the payments are set out. This way you both know what will be expected of you. Your son or daughter may really be ready (in their own mind) to take over the house payments, but are they really? Because they need a cosigner, they probably are not.
Don't Take Chances
Unless you really like risk, or have the finances to take a hit, the risk is probably not worth it. If your son or daughter is not financial sound, then it can all come and backfire on you. This is not something you want. You do not want to enter a situation where the only thing that can happen is for something negative to happen to you. You will most likely want to sit this one out, or try to convince your child to hold off for something that is a better fit.
If your son or daughter is anxious, then there are ways you can help them work towards their goal. This is not something that if not achieved right away should not be failure. In fact, the failure could come if a house is achieved to quickly. They need to make sure they are backed correctly, and can assume a reasonable payment. So what they can do is work to build up their credit score to a solid number. This will mean they can make a good down payment, and then continue to have reasonable monthly payments. In the end, that will suit them better then a house that has been build on high interest and large payments. So patience can be something that will truly pay off. They just need to come to this realization. This can be hard if they are too anxious.
If you cannot help and cosign, then sit them down. Explain why this is not a responsibility you want to take on. But also tell them how they can work on making this situation better for both of you. In the end, if done right, they will not need you to cosign. That should be their goal.
