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No! No! A Thousand Times No!

I e-mailed a client whose home has been sale for a very long time, asking how things were going. She replied that, coincidentally, she was going to call me later that day!

 

Turns out, she needed advice on proceeding with a buyer who really loved her house, but couldn’t demonstrate enough income to obtain financing. He’s the son of people they know from church, and they would love for him to buy the house so they in turn can move in with their own son. They'd even help him take the house off their hands.

 

“He makes tons of cash,” my client said. “His parents have some financial issues, so they can’t help. But what if my husband and I co-sign his mortgage loan? This way we get the money for the house, and he promises to eventually refinance and let us off the hook.”

 

“Whoa,” was the most articulate way I could begin. I was trying hard to form words above the cranial clang of alarm bells.

 

“This is way-too-creative financing! You will get your money, sure, but if he doesn’t pay, you’ll dent your credit big-time. Even if he pays, you can’t compel him to refinance, and while you’re on his mortgage, your ability to obtain financing for any other reason will be curtailed due to the outstanding loan you’re obligated to repay.”

 

The homeowner had no idea that she couldn’t compel him to refinance, and she didn’t realize that as a co-signer, her credit would be affected. She expressed gratitude for my guidance, but was sad that I splashed cold water all over her plans to get her “church friends’ boy” into her house.

 

“Oh, well, you can’t fault me for trying,” she chuckled. No, no, I sure couldn’t.

 

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