Real Estate Q&A; Can I use my credit to help buy a house where someone else pays the mortgage?

Can I use my credit to help buy a house where someone else pays the mortgage?

By Gary M. Singer

Carpinteria

6180 Via Real #65 3/2 12:30-3 $515,000 Gorgeous, top of the line Silvercrest manufactured home in the Vista de SB (55 +) park.

Village Properties Gail Cooley 805-689-7767 # 01106302

If your children cannot qualify for a loan, there is a good chance they cannot afford monthly payments or have a history of not paying their bills.

Photo courtesy Dreamstime/TNS

Questions

What are the pitfalls for a mother to use her credit to buy a house for her thirty-something son in another state? Both of our names would be on the title. He would make the down payment and make the mortgage payments. After a year, how would I remove my name?

– Peggy

Goleta north

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3/2 1-4 $1,025,000

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Goleta north

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Goleta South

6815 Shadowbrook Dr 6/3 12-2 $1,995,000 6 BD/3 BA, on one of the LARGEST lots in Storke Ranch! 1 BD/1 BA downstairs. 3 car garage. Patio & pergola in spacious & serene backyard.

Village Properties John A. Sener 805-331-7402 # 00978392

Goleta South

Answer

As a parent myself, I understand the urge to help your child.

This is a common scenario I see in my law practice, and sometimes it works out fine. That said, it often turns into a disaster for the family member.

Your credit is yours and not something to use for someone else.

If your son cannot qualify for a loan, there is a good chance he cannot afford the payments or has a history of not paying his bills. You will be on the hook if your son does not pay the mortgage.

Because both of your names are on the title, you would be unable to sell the home to pay off the mortgage without his consent.

You could also be liable if someone gets hurt at the property. The injured person would sue all property owners to recover for their damages.

While you can remove your name from the property’s title, you cannot take yourself off the mortgage loan even if you no longer own part of the home. You would then be in the unenviable position of personally owing money collateralized by the property you have no interest in or control over.

Finally, you must be truthful when applying for a mortgage. You will need to inform the lender that you are not paying the deposit or making the monthly payments. A lender probably will not want to make a loan in this circumstance, but not being truthful when applying for credit is a crime.

If you still want to go through with this, you should speak with a local attorney to properly structure the transaction to minimize the pitfalls.

Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation.

6866 Shadowbrook Dr 4/3 12-3 $1,955,000 GRAND & Spacious!!! Signature IV Model! 4 BD + bonus room. Your choice as an extra Office/Study/Bd. 3 full baths. Soaring ceilings. An abundance of natural light throughout. Open Concept Kitchen/Family RM. Village Properties Brenda Hoppers 805-455-3272 # 02133758

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