Should I co-sign a house for my parents? Help!

NEW -> Contingent Buyer Assistance Program
I think it will be difficult for you to convince your parents they should rent vs. own. Even though they are looking to you for help most likely they still view you as their child. If it were me I'd arrange a meeting with you, your parents and a 3rd party (i.e. CPA, CFP, or someone with experience in this type of situation) You need someone that can look at the details of the agreement with no emotional cloud of judgement. I see this all the time where families concoct some plan thinking it just so easy to get around the rules and end up with a rude awaking. For example, If you go on title and take out the loan and they make the payments, how does the IRS view that? Are you going to have to calm rental income? How is this down payment going to be treated? If the house is in your name, is their down payment a gift to you? And how on earth are they going to get a new loan to buy you out in a couple years if interest rates are much higher?



I think the appropriate saying here is "the road to hell is paved with good intentions". Your intentions may be good in that you want to help your parents. But their choice really sounds like a bad one. How is it an act of love to enable someone to make a bad choice? Let's get real here. If this scenario ends badly, it could very well ruin your family's relationship forever. If your parents have to rent for a while longer, they will be mad at you but they will be okay and they will get over it.
 
yes,, rent is a waste of money, just like sleep is a waste of time... sorry can't say anything new... how about moving them to Thailand, Costa Rica, Mexico? Good luck & welcome...
 
[quote author="roundcorners" date=1257855095]yes,, rent is a waste of money, just like sleep is a waste of time... sorry can't say anything new... how about moving them to Thailand, Costa Rica, Mexico? Good luck & welcome...</blockquote>


You are starting to sound like Panda, a little change in the tone, but I like it. Anyway, the sleep and rent analogy is pretty good.
 
[quote author="Rookje" date=1257844380]



He retired early because he was ill (he has diabetes, and worked in a construction/physical-esque job so it was physically demanding on him with the illness), and he also felt he had to do it during the foreclosure in order to afford a new rental (reboot his financial life, as it were). I very much disagreed with that, because I felt he was too young to retire and that they could definitely not live off his pension alone for the remainder of their lives. They've lived paycheck-to-paycheck for years, and were floating on credit.



I had to basically explain to them that YES, this house is now lost and we have to move out. I got them the new rental, had them pay off all bills and lines of credit with my Dad's retirement and stressed to them to pay that rent on time every month. So far they have, to my knowledge.



I'm going to try to convince them to rent again, but it's not going to be easy. Sigh.</blockquote>


Stick to your guns. You helped them rent once, and should do it again. A house purchase should be out of the question for many, many reasons. I remain skeptical about the owner of the rental wanting them to leave, if they have been paying on time. Landlords are desperate for reliable tenants.



I'm 57. I'm diabetic. I work. Sure, your Dad, in his 'mid-late 50s' may not be able to do heavy, physical labor. But he should be doing something more than using you as a crutch.



Finally, whatever arrangement you eventually work out with them, you need to have no expectation of repayment. Consider whatever you give them as exactly that -- a gift. Otherwise, you will likely develop a resentment and anger that will destroy your relationship with them.
 
<blockquote>Anyway, here?s the point: unless you?ve got a check ready to pay them off for all the money they spent raising you, refusing them help is akin to throwing them off a speeding train. </blockquote>


That statement wins the Darwin award. Some people dont have any business having children ever for a reason.
 
Oh God! I'm in a similar situation. My parents were financially responsible until they saw their friends and neighbors making six figures flipping real estate. So in 2006 they bought a home in Irvine, and in 2007 they bought a bigger home in Riverside. They thought they could hang on and flip the Irvine home, instead the market went south, their stock investments went south and now they can't hold on to either house due to the interest rate racheting up 2% per year.



Now they are trying to work out loan modification for their Riverside home, since that is the cheaper property. The Irvine home they will walk away. But even the loan mod is not easy to do when your income is only $2700 a month. House was $400K now worth $175K in a retirement community 55+ age restricted. So bottom line they will lose both homes.



So I have thought of different ways to help them, but the best method is for me to buy an annuity for my Dad. My dad is 80 and a $2K a month annuity is $240K with a guaranteed return on premium payments. So if my dad lives over 90, the $2K a month is free money. But if he dies before 90, I get $2K a month until total payments equal $240K. So really I am just losing use of my use of money for the next 10 years. With that extra money, my parents can rent a nice home. Buying is out of the question since their credit is ruined now.



I figure this is the only way to help, since if I have to pay them monthly, they will likely do something stupid to piss me off.



Yes it is sad when parents are a burden, but it is only money. You can always make more.

I'm in my prime earning years, so it only will delay my retirement for a few years. Looking back my parents did make big sacrifices to come here to the US and raise us. Once you have kids, you will know what a thankless job it is.



In your case, you are just starting out... you need to make sure whatever help you provide to them, will keep your options open to buy a house, or get married, or have kids, etc...



And when you are co-signing a loan, you are responsible for the whole loan if your parents or brother fails to pay. Your name only gets taken off the loan when the loan is paid off. You don't want your name off the deed and not off the loan. If you were living in the property, it would be a no brainer. But that is not your situation. So I would offer to supplement their income, not co-sign. Now is a terrible time to buy real estate anyway, it will only be cheaper in the future.



If you and your brother chip in $500 each, they will be able to rent a nicer place. If you want to co-sign, cosign a new annual lease. this way your potential financial damage will be limited and short term. A mortgage is 30 years long and a potential for you to file bankruptcy if your parents and brother reneg on the payments.



Best of luck...irvinefsbo
 
You must log in or register to reply here.
Back
Top