I am was wondering whether cosigning for a home and being immediately taken off the title affect my financial aid? This will be the first home my Parents buy. Currently my Family Contribution Factor is at 0.
Are you talking about undergraduate financial aid or grad school financial aid?
Will you be attending college as a dependent or an independent student?
How will you be able to co-sign for a mortgage?
I’m currently an undergraduate student and I will be attending as a dependent student
Why would you cosign on their loan?
Again,
How will you be able to co-sign for a mortgage? Are you currently working? If yes, then your income from work will definitely affect your financial aid
Yes I have been working and attending college for the past 2 years but my income has not affected my eligibility. The reason I am cosigning is to qualify them for a bigger loan because my father is the only one who works.
You cannot co-sign and immediately be ‘taken off the title.’ If the bank wants you to co-sign and be on the title, that’s where you’ll stay as far as the bank is concerned. They want everyone on the loan to be in the chain of title and things that happen after the mortgage is signed don’t change that (and can cause the loan to be called due). If you only co-sign the loan, and never get on the title (may not be allowed by the lender), then you have a debt but no asset.
Is this for a second home? Then it will affect FA. If it is the primary residence, it will not go on FAFSA, but I don’t know about CSS.
Talk to an attorney if at all possible before co-signing. By co-signing, you are promising that you will make the full house payments in the event that your father can no longer do so. So if he somehow lost his job or became ill, it would become your responsibility to make the payments for the length of the loan. Once you graduate from college, having your name on your parent’s loan means that if you are trying to get a loan for your own house, or for anything else, you may not qualify because of that debt. So unless you can afford, right now, to make the full payments for your parent’s house, do not co-sign for that loan. If you default, it will ruin your credit and may affect you getting future loans you need for school.
Agree with all above-- bad idea. They should only buy what they can afford. Are they helping with your college costs too?
I would not cosign on a mortgage in your case, that is a commitment of 10, 20 30 years and you are much younger than your parents, that’s why the bank is willing to have you cosign.
After you graduate you might have student loans to pay back, need a car to commute to a job, want to rent or buy a house of your own and maybe get married, all of this will be made even harder by cosigning this loan.
I would never ask my college aged child to cosign a loan so I could qualify for a larger mortgage. I’d buy a less expensive home or wait until both my spouse and I were working before I bought something.
I think there are a lot of questions I’d ask before becoming involved in this plan. If your dad can’t qualify for as much as your parents want on his income, how will they afford the payments? If they have a financial set back, will you be able to take over the debt? If, Heaven forbid, something happens to your dad, is there life insurance to pay for the home? If the loan affects your financial aid, do you have a backup plan to pay for school?
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You cannot co-sign and immediately be ‘taken off the title.’
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This is true.
And, it seems like the OP doesn’t fully understand this anyway. Being taken off the title would just mean that he’d no longer be a part-owner. It would NOT mean that his name has been removed from the loan obligation.
Anyway…he can’t just remove his name from the title right after the parents buy the home.
Your parents will have to purchase a less expensive home…or your mom will have to go to work to increase their income.
Actually, he can co-sign, he can then quit claim his ownership in the house (mortgage lender won’t be affected), but he needs to understand the consequences. I give him credit for asking.
All the advice here is good. Know what you are agreeing to, which is to be a part owner, to have your credit resting on the loan payments being made by others. That might be a good thing or a bad thing, depending on how the payments are made, but you might not even know if they don’t make the payments on time until you receive a foreclosure notice. It probably won’t affect your student (government) loans or FA because those are mostly based on your parents assets and income. You’ll fill out the form, it will ask if you have assets, but if you have quit claimed the property, your answer will be ‘no, no assets.’ It really will affect your future credit more than college FA. It is unlikely you’ll have enough credit to debt ration to buy your own house, even a car loan may be denied as you have too much debt out there.
Just know that your credit rating and availability will be impacted. You will owe this debt just as much as your parents. If you quit claim the property to your parents, you’ll have the debt without the property, so it will be as if you have a big old credit card debt (although it won’t show on your credit score like that, it will show as a secured debt because it is still secured with the bank, just not with you). Bank doesn’t care who they collect from, and the reason they are looking to add your signature is, I assume, because you have money or income to pay the mortgage payments.
If your parents can qualify for a larger loan without your income…they should look for a place with a smaller loan needed. In my opinion, if you can’t qualify for a mortgage amount, you shouldn’t be taking a mortgage in that amount.
Banks typically approve folks for mortgage amounts that are on the higher side anyway relative to income.
Unless you are prepared to make some part of the payment, don’t cosign this loan.
How old are you anyway? Will your “income” continue when you go to college? If not, tell that to the bank officer.
And lastly…with all this debt your parents are assuming…will they be in a position to help YOU with college costs?