Mother is looking to refinance and asking me to co-sign

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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

celia wrote: Wed May 12, 2021 1:54 pm I didn’t notice anything about how much time is left on that 6% mortgage and if it is the original mortgage she had with her ex. If it only has a few years on it, grin and bear it (with yor help).

If she has re-financed a few times, that will likely keep happening, so don’t get involved.
This is another detail that I need to find out. I believe the house was refinanced only once (early 2000s) when my parents were still married. I would guess there are 10-14 years left on the mortgage if that is the case.

celia wrote: Wed May 12, 2021 1:54 pm Another possibility, if you can afford it, is to pay off the balance in exchange for a new “mortgage” from you, that is recorded with the county. This will ensure you would get your money back before it is sold, even if you should die. Check with a real estate lawyer to generate the proper paperwork, if you are interested in this option.
I will have to find out what is owed in order to see if that idea is feasible.
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ResearchMed
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Re: Mother is looking to refinance and asking me to co-sign

Post by ResearchMed »

max79 wrote: Wed May 12, 2021 11:43 pm
Point wrote: Wed May 12, 2021 1:25 pm Your mother is the one that should be in this forum explaining her finances in detail and coming up with a plan to assess her current debt, her needed capital outlays, and her income and expenses moving forward. Until she takes responsibility for her current situation her financial life won’t improve, with or without your assistance. However, yours will not improve if you assist her before she solves the fundamental issues. Having a boyfriend living with her temporarily put off the need to do this.

She is breaking rule #1: never be a burden on your kids.
Agreed. She left the workforce years ago knowing that her boyfriend would assist with her finances. He later decided that he no longer wanted to work. They were not living extravagently but were getting by as they lived together.

When my parents were going through their divorce (she had already quit her job at this point), I had expressed concerns about finances. She said she would never ask me for a penny....and here we are.
Keep this in mind, right at the top of your mind, IF you provide any assistance other than emotional support, encouragement, and perhaps help finding a smaller place to live that she can actually afford.

It isn't going to get better as she runs out of money more and more, etc.
Is she physically/medically able to work? Is it "only" a choice that she prefers not to work, regardless of the reason? I mean, is there a *serious* medical condition or such?
If she just doesn't like the current work choices, well, there are a lot of people (including some right here on BH) who also don't "like" their work. But work they must, to support their lifestyle (and often that of their families). She has "just herself". That gives her MORE flexibility: She can not work, and downscale. Or work. It's just her choice, for her self.

RM
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Marseille07
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Re: Mother is looking to refinance and asking me to co-sign

Post by Marseille07 »

cheese_breath wrote: Wed May 12, 2021 11:46 pm
max79 wrote: Wed May 12, 2021 11:43 pm
Point wrote: Wed May 12, 2021 1:25 pm Your mother is the one that should be in this forum explaining her finances in detail and coming up with a plan to assess her current debt, her needed capital outlays, and her income and expenses moving forward. Until she takes responsibility for her current situation her financial life won’t improve, with or without your assistance. However, yours will not improve if you assist her before she solves the fundamental issues. Having a boyfriend living with her temporarily put off the need to do this.

She is breaking rule #1: never be a burden on your kids.
Agreed. She left the workforce years ago knowing that her boyfriend would assist with her finances. He later decided that he no longer wanted to work. They were not living extravagently but were getting by as they lived together.

When my parents were going through their divorce (she had already quit her job at this point), I had expressed concerns about finances. She said she would never ask me for a penny....and here we are.
She hasn't asked for a penny... yet. She probably thinks everything will be OK if she can reduce the mortgage payment. Maybe it will, maybe it won't.
Asking to co-sign is essentially asking for money, given her behavior. Believing otherwise is just kidding yourself.

As far as the OP's choices go, imo if she wants to go with a reverse mortgage then that seems fine to me. She'll lose her home eventually, but she might not care at that point.
Last edited by Marseille07 on Thu May 13, 2021 12:06 am, edited 2 times in total.
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cheese_breath
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Re: Mother is looking to refinance and asking me to co-sign

Post by cheese_breath »

max79 wrote: Wed May 12, 2021 11:18 pm ...
- Co-signing which I have all but ruled out (unless my name is on the deed but even then not a good idea). My brother may not like that too much though.
....
Speaking of your brother, is he involved in helping your mother? If he isn't, then what he thinks doesn't matter.
The surest way to know the future is when it becomes the past.
Topic Author
max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

Nebraska_Drought wrote: Wed May 12, 2021 2:10 pm I guess it comes down to how comfortable you are with your own finances to want to provide any "help" to her situation? I am all for helping people, but as others stated, you need to have a full disclosure of current finances and debt (like from a current credit report) before you even consider and even then, you would need to insist on being on the title.

Blanket statements about any obligation to providing help made by some responses are just not correct. "Loaning" money to family is pretty much giving it away, you probably will never see it again. Just as you were not part of her being in the financial situation she is in, you are also not responsible for fixing it. I personally will never feel an obligation to fix someone else's mess as I had no say in how it got that way and I don't want to sidetrack my own path to FI.
I learned this lesson the hard way as I once loaned money to another family member. It was paid back but took a long time.
Nebraska_Drought wrote: Wed May 12, 2021 2:10 pm]
The other "Red Flag" is her unwillingness to work. At her age and financial situation, that absolutely has to be an option (full time job outside of the house) as without that, it really, really makes deciding all of this more difficult. Not knowing the existing term of the mortgage, she may be able to work the next 8 years (to 70) and have the house paid off and some extra savings in the bank too. There are so many jobs available right now, it is unfathomable that working is not one of her solutions.
She never has worked full time. When I mentioned working, she mentioned something about having to wear a mask and it makes her sick to wear it for too long.
Last edited by max79 on Thu May 13, 2021 12:22 am, edited 1 time in total.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

DidItMyWay wrote: Wed May 12, 2021 2:22 pm I agree that you should definitely not co-sign.
Others may disagree, but one of my personal financial rules is to never, ever co-sign for anyone.

Do you have siblings?
If so, maybe the siblings and you can get together and give a one time gift of some $ to "tide her over until she can get a job". If you don't have siblings but you are financially doing fine yourself (no debt, adequate emergency fund, etc.) and feel inclined to help her, you could give her a one time gift of some $ to "tide her over until she can get a job". If you don't feel like you want to do that, I would try to encourage her to sell her house and buy (or rent) a place that she can afford on her own rather than taking a reverse mortgage.

Good luck!
I have a brother. He is married and they seem to be living above his means, although I don't know for sure. They bring in a good income I think but also spend a lot as well.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

Taylor Larimore wrote: Wed May 12, 2021 2:32 pm Max79:

Copy this entire conversation for your mother. It is full of valuable information and suggestions about her dilemma (and yours).

Best wishes.
Taylor
"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." --Charles Dickens
Good idea! I may have to edit some as she may not appreciate some of my posts but I will definitely be presenting these ideas to her. Thanks again to everyone who has contributed. And thanks to you Taylor for your work as well.
Last edited by max79 on Thu May 13, 2021 12:30 am, edited 1 time in total.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

freckles01 wrote: Wed May 12, 2021 6:09 pm OP, can she rent out a room or two to bring in extra income?

Tenants can help cover the mortgage and maintenance costs without you having to co-sign.
She could but tbh I doubt she would be willing to.
Topic Author
max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

hudson wrote: Wed May 12, 2021 6:27 pm
max79 wrote: Wed May 12, 2021 11:05 am How can I help without risking my own financial situation?
If I was in your shoes, I would humbly and politely request full disclosure.
Without full disclosure, you don't have enough information.
I would want to outline her current financial situation in detail on a piece of paper or two.
I would want to see all documentation including the deed to the house.
I would study the above and try to define the problem.
When you see it all outlined on a piece of paper, it might be easier to figure out what you can do.
It looks like the parent-child roles are reversing.
It does seem like it, unfortunately.
I am going to have to gather this information before I offer her any help or advice.
Marseille07
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Re: Mother is looking to refinance and asking me to co-sign

Post by Marseille07 »

max79 wrote: Wed May 12, 2021 11:18 pm Thanks all for the responses and ideas.

There are a number of options:

- Co-signing which I have all but ruled out (unless my name is on the deed but even then not a good idea). My brother may not like that too much though.

- Give her a monthly stipend for a linited time. This would buy her time so she can figure out a way to increase her income or cut her expenses. Only problem is that she may become dependent on that and expect it indefinitely.

- Give her a one-time gift to buy her some time. I think I like this idea better than a monthly stipend if I make it clear it is a one time thing. The ball would then be in her court to take action (generate income or sell house) and there would be a hard deadline.

- Buy another house and rent it to her. The problem is that she likely would not like it as much as current house. I could be stuck with the mortgage if she defaults on her rent.

- She sells her house and either buys a smaller house or rents.

- She rents out a room in her house or brings in a roommate. Not sure how feasible this is.

- I buy her house and rent it to her. I could swing this....if I sold my current house. Even if I were to come up with a down payment, the mortgage would likely exceed what she could afford to pay for rent.

- Move out of my current house and rent it to her. I have thought about moving to an area with a better job market. My house is a lot smaller though.

- Pay off her mortgage balance and I replace the mortgage company. Depending on what her balance is, I would likely have to get my own loan. If the numbers work for me, this could be a feasible option. Would I be able to get a lien on the house in case she were to default? Not that I would repo it but this would make it clear that this is what is owed to me in case she sells.

There does not seem to be much fanfare for the reverse mortgage here. One poster brought up that there would not be enough equity to last 30 years. Howver she would likely collect on an inheritance before then.

I could see her stobbornly refusing to move unless all options are exhausted. She would not want to live in an apartment and I could see her going for the reverse mortgage option to prevent that.

If she needs my help, I will definitely need more details on her financial situatiin - how much is left on current mortgage, credit card debt, montly income vs expenses, monthly mortgage payment, and what she was hoping to pay if her refi was approved.
I think you should narrow down the options. Your moves would come down to essentially these:

a) give her money
b) she downsizes to a smaller house / rent
c) she gets a reverse mortgage, eventually loses the house

Unless you *really* want to, buying her house / you moving out etc etc do not seem practical.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

cheese_breath wrote: Wed May 12, 2021 11:38 pm Before you go very far on the 'buy more time' options you and she need to develop a plan together for solving the problem. Otherwise she might end up in the same situation as she is now when the 'buy more time' money runs out.
Good idea because I can see this potentially happening especially if there are unexpected expenses.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

cheese_breath wrote: Wed May 12, 2021 11:55 pm
max79 wrote: Wed May 12, 2021 11:18 pm ..
- Co-signing which I have all but ruled out (unless my name is on the deed but even then not a good idea). My brother may not like that too much though.
....
Speaking of your brother, is he involved in helping your mother? If he isn't, then what he thinks doesn't matter.
He is not. She could ask him to cosign but his wife would have something to say about that.
Last edited by max79 on Thu May 13, 2021 12:45 am, edited 2 times in total.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

ResearchMed wrote: Wed May 12, 2021 11:53 pm
max79 wrote: Wed May 12, 2021 11:43 pm
Point wrote: Wed May 12, 2021 1:25 pm Your mother is the one that should be in this forum explaining her finances in detail and coming up with a plan to assess her current debt, her needed capital outlays, and her income and expenses moving forward. Until she takes responsibility for her current situation her financial life won’t improve, with or without your assistance. However, yours will not improve if you assist her before she solves the fundamental issues. Having a boyfriend living with her temporarily put off the need to do this.

She is breaking rule #1: never be a burden on your kids.
Agreed. She left the workforce years ago knowing that her boyfriend would assist with her finances. He later decided that he no longer wanted to work. They were not living extravagently but were getting by as they lived together.

When my parents were going through their divorce (she had already quit her job at this point), I had expressed concerns about finances. She said she would never ask me for a penny....and here we are.
Keep this in mind, right at the top of your mind, IF you provide any assistance other than emotional support, encouragement, and perhaps help finding a smaller place to live that she can actually afford.

It isn't going to get better as she runs out of money more and more, etc.
That is what I am afraid of. In the divorce settlement, her main concern was getting the house so all of her eggs are in that basket. There is no 401 to tap into. Maybe an IRA but if there is, it isn't much.
Nebraska_Drought wrote: Wed May 12, 2021 2:10 pm
Is she physically/medically able to work? Is it "only" a choice that she prefers not to work, regardless of the reason? I mean, is there a *serious* medical condition or such?
If she just doesn't like the current work choices, well, there are a lot of people (including some right here on BH) who also don't "like" their work. But work they must, to support their lifestyle (and often that of their families). She has "just herself". That gives her MORE flexibility: She can not work, and downscale. Or work. It's just her choice, for her self.

RM
Hard to say. She has some health issues but seems to be doing better now that she is no longer with her boyfriend.
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max79
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

Marseille07 wrote: Thu May 13, 2021 12:23 am
I think you should narrow down the options. Your moves would come down to essentially these:

a) give her money
b) she downsizes to a smaller house / rent
c) she gets a reverse mortgage, eventually loses the house

Unless you *really* want to, buying her house / you moving out etc etc do not seem practical.
Those do seem to be the most feasible options.

There is a chance she could get a job or more side jobs and increase her income but that could take some time.
chris319
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

I haven't read all of the posts in this thread.

The OP didn't say anything about siblings, so I'll assume none.

I didn't see a figure for how much she owes on this mortgage. A little? A lot?

I will also assume that this house is your inheritance. If you sell it and put her in an apartment, there goes your inheritance.

Are you in a position to pay off the mortgage yourself? That would get rid of the mortgage debt and its interest. At the same time, work out an arrangement with mom where she pays you an affordable monthly stipend at very low or no interest to repay your "loan" to her. Does she have a will? Have her make one which leaves the house to you. You will then own it free and clear. If she is going to come into an inheritance, that can be used to repay the "loan". If you want to get really fancy, have her sign over to you a 10%, 50% or whatever ownership interest in the house.

As my mother often reminded me, she is the one who used to change your diapers. You want her to be happy and comfortable. You have a self interest in keeping the house as you presumably stand to inherit it and participate in its future appreciation.

You will also need to have an estate-planning lawyer review the terms of whatever you do so no one gets screwed.

Also, your mom needs a financial plan. Put her on a budget and rein in those credit cards.
The only person you have to please in life is yourself.
chris319
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

A modification to my previous suggestion:

Since you have a brother, each of you pays off half the remaining mortgage balance. Goodbye mortgage.

Mom signs the house over to you and brother 50/50.

Mom pays you and brother an amount she can afford each month, say, 1/12 of the annual property tax bill if she can swing it.

Mom gets out from under the mortgage and keeps the house.

You and brother have made a real-estate investment and have received what amounts to an advance on your inheritances.

I like this better than you and brother taking over the mortgage payments, even if you could refinance at a lower rate. Based on what you've said, it doesn't sound like brother could be depended on to service his half of the mortgage.

No need for her to leave the house to you and brother in her will because you will already have title to it.

Have a lawyer analyze the gift-tax ramifications of this idea.

Mom makes you some cookies. That's the least she can do.
The only person you have to please in life is yourself.
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celia
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Re: Mother is looking to refinance and asking me to co-sign

Post by celia »

OP, if you are thinking of carrying her mortgage, you should be entitled to see all her income and expenses, to see how much she can afford to pay you each month.

And when looking at her proposed budget, just keep in mind that it is just math.
Income = Expenses (including savings)
Tell her, it is just a math balancing problem. No need to bring emotions into it, although some may be displayed.
HomeStretch
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Re: Mother is looking to refinance and asking me to co-sign

Post by HomeStretch »

If your mom will not take steps to help herself by increasing her income and/or reducing her expenses, consider helping her find the best reverse mortgage deal (including calculating the maximum monthly draw so the $ last 20-30 years) so she can go that route. You (and perhaps your brother) can plan to be her financial safety net in the event the home equity runs out in 20-30 years.
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Re: Mother is looking to refinance and asking me to co-sign

Post by ddurrett896 »

No way I would co-sign.

How much is the house worth and what is owed?

How much is her mortgage payment and income? Could she sell the house, take the cash and bank it and live in a apartment that is less than her mortgage today?
WillRetire
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Re: Mother is looking to refinance and asking me to co-sign

Post by WillRetire »

In addition to all the suggestions made so far re:ways to help your mother without co-signing a loan, how about helping her find a training program that would lead to a decent job?

Senior centers often have good resources for local job training programs, as well as housing. I know, she doesn't want to move, but it doesn't cost anything to investigate & learn what some of the job training & housing options are.
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Re: Mother is looking to refinance and asking me to co-sign

Post by Nebraska_Drought »

You mentioned that the house needs a new roof soon, what about other deferred maintenance ? In essence, what happens if the furnace goes out or the AC? She is barely scraping by, so if you do get her settled up on the mortgage side of it, there are ongoing costs of home ownership. IMO, you are trying to do the best you can, but it appears that going down a rabbit hole. Good luck !
chris319
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

When she was trying to refinance, did she approach more than one lender? Or did the first lender she approached say "no" and that was the end of it?

If she takes a job, will her soc sec benefits be reduced?
The only person you have to please in life is yourself.
chris319
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

ddurrett896 wrote: Thu May 13, 2021 6:45 am How much is her mortgage payment and income? Could she sell the house, take the cash and bank it and live in a apartment that is less than her mortgage today?
It has been mentioned several times in this thread that she is attached to the house and would likely be unwilling to move.

We're talking about a person's life; it's not like moving a piece of furniture around. There are human considerations, not just dollars and cents. Besides, the house is her legacy to her sons. They will presumably inherit that house some day. I went through something similar with my mother.
The only person you have to please in life is yourself.
Nebraska_Drought
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Re: Mother is looking to refinance and asking me to co-sign

Post by Nebraska_Drought »

chris319 wrote: Thu May 13, 2021 8:12 am
ddurrett896 wrote: Thu May 13, 2021 6:45 am How much is her mortgage payment and income? Could she sell the house, take the cash and bank it and live in a apartment that is less than her mortgage today?
It has been mentioned several times in this thread that she is attached to the house and would likely be unwilling to move.

We're talking about a person's life; it's not like moving a piece of furniture around. There are human considerations, not just dollars and cents. Besides, the house is her legacy to her sons. They will presumably inherit that house some day. I went through something similar with my mother.
Understood, but there is reality tied into the human considerations. I'd love to drive a brand new Ferrari. It could happen, but reality says that my finances would not allow me to do so even though I may be attached to that type of car. I'd love to donate $100K to charity every year, but financial reality does not allow that. In this situation, the mother would love to stay in the house but financial reality is that it pretty much is not possible without help especially if she refuses to get a job. Not a great situation and we are dealing with a similar situation with my mother-in-law and we are helping her by getting her on a budget and prioritizing what her spending goes towards along with emotional support as she became a widower 2 years ago.
Last edited by Nebraska_Drought on Thu May 13, 2021 9:34 am, edited 1 time in total.
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Re: Mother is looking to refinance and asking me to co-sign

Post by cheese_breath »

Nebraska_Drought wrote: Thu May 13, 2021 9:09 am
chris319 wrote: Thu May 13, 2021 8:12 am
ddurrett896 wrote: Thu May 13, 2021 6:45 am How much is her mortgage payment and income? Could she sell the house, take the cash and bank it and live in a apartment that is less than her mortgage today?
It has been mentioned several times in this thread that she is attached to the house and would likely be unwilling to move.

We're talking about a person's life; it's not like moving a piece of furniture around. There are human considerations, not just dollars and cents. Besides, the house is her legacy to her sons. They will presumably inherit that house some day. I went through something similar with my mother.
Understood, but there is reality tied into the human considerations. I'd love to drive a brand new Ferrari. It could happen, but reality says that my finances would not allow me to do so even though I may be attached to that type of car. I'd love to donate $100K to charity every year, but financial reality does not allow that. I this situation, the mother would love to stay in the house but financial reality is that it pretty much is not possible without help especially if she refuses to get a job. Not a great situation and we are dealing with a similar situation with my mother-in-law and we are helping her by getting her on a budget and prioritizing what her spending goes towards along with emotional support as she became a widower 2 years ago.
+1 And if she's spending more than her income as OP believes, there might come a time when her savings are depleted and credit cards charged to the limit. Then how would she make her mortgage payments? Better to look at things through cold financial eyes now than risk possible foreclosure later.
The surest way to know the future is when it becomes the past.
chris319
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

Don't ignore the supposition that her sons may eventually own the house, either through inheritance or some other means.
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cheese_breath
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Re: Mother is looking to refinance and asking me to co-sign

Post by cheese_breath »

chris319 wrote: Thu May 13, 2021 9:32 am Don't ignore the supposition that her sons may eventually own the house, either through inheritance or some other means.
Wouldn't ignore anything until we know the current state of Mom's finances. Apparently she thinks she'll be getting an inheritance. We need to know more about that too.
The surest way to know the future is when it becomes the past.
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Re: Mother is looking to refinance and asking me to co-sign

Post by Marseille07 »

max79 wrote: Thu May 13, 2021 12:58 am
Marseille07 wrote: Thu May 13, 2021 12:23 am
I think you should narrow down the options. Your moves would come down to essentially these:

a) give her money
b) she downsizes to a smaller house / rent
c) she gets a reverse mortgage, eventually loses the house

Unless you *really* want to, buying her house / you moving out etc etc do not seem practical.
Those do seem to be the most feasible options.

There is a chance she could get a job or more side jobs and increase her income but that could take some time.
Right. She getting a job isn't a solution because it's not actionable on your part (or maybe even on her part).

If she is expecting some inheritance, a reverse mortgage might not be terrible, provided it'd last until then.
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cheese_breath
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Re: Mother is looking to refinance and asking me to co-sign

Post by cheese_breath »

Marseille07 wrote: Thu May 13, 2021 9:51 am ... If she is expecting some inheritance, a reverse mortgage might not be terrible, provided it'd last until then.
I mentioned the inheritance above, but I wouldn't include it in any planning until it's actually paid out to her.
The surest way to know the future is when it becomes the past.
Marseille07
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Re: Mother is looking to refinance and asking me to co-sign

Post by Marseille07 »

cheese_breath wrote: Thu May 13, 2021 10:01 am
Marseille07 wrote: Thu May 13, 2021 9:51 am ... If she is expecting some inheritance, a reverse mortgage might not be terrible, provided it'd last until then.
I mentioned the inheritance above, but I wouldn't include it in any planning until it's actually paid out to her.
It would be her call to decide, since we don't know how much / how soon. But eating down the house would buy some time for the time being is my wild guess. That's essentially what a reverse mortgage is - it's undesirable, but she wants to do it rather than taking alternatives.
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Re: Mother is looking to refinance and asking me to co-sign

Post by LittleMaggieMae »

max79 wrote: Wed May 12, 2021 11:34 am
Stinky wrote: Wed May 12, 2021 11:16 am Do not co-sign.

It sounds like your mother may be in a more expensive house than she can maintain for the long term. She may need to sell and downsize.
That is what I have thought about suggesting. She could probably buy a smaller place and have it paid off with the equity she has in current house. Does not seem open to thay idea tbough and I would suspect she wluld choose a reverse mortgage over that since she is attached to the house.
How much is the house worth? How much would your mom be refinancing and for how long? What kind of shape is the house in? In 5 or 10 years - what is she going to do when she needs a new refrigerator or washer/dryer or the kitchen sink's garbage disposal stops working? Or any number of things that will simply wear out reach the end of their life?

If she can't afford the house now - how is she going to afford it in 5 or 10 years?

And if she differs spending money on this stuff (just stops using the bathroom that has a tub/sink clog she can't undo - or just ignores the dripping faucets for example) over time the house will begin to loose value - as damage is done by the things she's ignoring.

If the mortgage is at a low amount (but with a big monthly payment for a handful of years) AND if your income is enough to take over a new "cosigned" mortgage AND the expenses on the house - then maybe I would go along with this. As it sounds like you might be helping your mom with expenses long term.

I suspect one way or another you will be giving your mom monthly money to make her ends meet. If you are doing that then you NEED to get involved with her finances (at a minimum knowing how much debt she has and what her income is) weather she likes it or not. You need to decide how much financial support you will give her.
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

If she can't afford the house now - how is she going to afford it in 5 or 10 years?
It's the high-interest mortgage payments she can't afford. Paying off that mortgage will be a giant step forward.

After that she'll need some financial planning as you suggest. It sounds like her soc sec income is meager, and she can't live off credit cards indefinitely. Pray that she doesn't blow her inheritance if she gets one.
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Re: Mother is looking to refinance and asking me to co-sign

Post by mrsmitt »

I know that everyone’s family situation is different, but this is your mom we are talking about. Her request and your justification has nothing to do with two years of college that were paid by your parents. They did much more than that for you...

I would let her know that co-signing is not a problem if this is in her best interests. However, you must review her financial situation in order to decide what the best solution is for both of you. You will have to discuss all options with her before making a decision.

PS. She should not be paying over 6% interest on mortgage in any case. It sounds like she needs lots of help. I hope you are there for her.
max79 wrote: Wed May 12, 2021 11:05 am My parents divorced years ago and my mom ended up with the house and the equity in it.

She had a boyfriend that was living with her helping with the mortgage until recently. She applied for a refinance to lower her payment as her current interest rate is significantly higher at over 6% than what is being offered these days. Apparently the lower payment would be at least several hundred less per month (not sure how much exactly) and give her enough to pay off her credit card debt.

She is 62 and collecting social security but not a whole lot since all of her jobs were part time and she never worked full time. She has a couple of house cleaning jobs to bring in extra income.

She asked me if I would be willing to cosign. I am thinking this would be a bad idea.

She has mentioned getting a reverse mortgage if she cannot qualify for a refinance or get a co signer.

While I did not ask for details, it seems that her monthly income is less than her monthly bills now.

Co-signing seems like a bad idea. My parents did pay for my first two years of college as I went to a commuter campus and lived at home during that time so I feel obligated to help in some way (hopefully without enabling her not to take steps to better her own situation).

She has not been in the workforce for almost 15 years and does not want to get a job because of covid, masks, etc. She is open to taking on additional side work however.

How can I help without risking my own financial situation?
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

Thanks for the additional responses and ideas.

As some of you have pointed out, I really need to get more information on her finances before I can evaluate the options. That will have to be the next step.

She was really hoping that the refi was going to be approved and said that would have worked. Not sure if she is thinking avout unexpected expenses tjat could come up though.

I am not sure if she tried to applied for a refi with other conpanies. I did suggest that idea though.

Good points about things breaking furnace, AC, faucets, etc. I own a house and know all too well that things go bad....at the worst possible time. I will likely be the on call handy man as well. She already asked me if I would cut the grass since the mower bothers her back. Part of the "benefit package" I give her may have to include hiring someone to cut her grass It is enough of a hassle to take care of my own house and lawn (as well as fixing mowers when they break) while working full time.

As for my brother, he is works a lot of hours and is strapped for time. He and his wife bring in a decent income between their jobs and side jobs but they have plenty of debt as well as they seem to live above their means. I am not sure how much (if anything) he would be willing or able to contribute.
Last edited by max79 on Thu May 13, 2021 10:43 am, edited 1 time in total.
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Re: Mother is looking to refinance and asking me to co-sign

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max79 wrote: Thu May 13, 2021 12:58 am
Marseille07 wrote: Thu May 13, 2021 12:23 am
I think you should narrow down the options. Your moves would come down to essentially these:

a) give her money
b) she downsizes to a smaller house / rent
c) she gets a reverse mortgage, eventually loses the house

Unless you *really* want to, buying her house / you moving out etc etc do not seem practical.
Those do seem to be the most feasible options.

There is a chance she could get a job or more side jobs and increase her income but that could take some time.
The only feasible option must include her downsizing.

By the information provided it strongly appears she is unable to afford this house. That being the case, the only sensible option includes reducing her housing costs.

They must be willing to help themselves.

Sure increasing income could be an option, but it didn't sound like that's a practical or realistic option.

Similarly a reverse mortgage is a bad option. It's an artificial, temporary "solution". And they're an expensive, largely junk product.

While you've made it clear she would be highly resistant to downsizing there is only one response to that: too bad.

If one can't afford it they can't afford it.

Whether you choose to give them money is up to you, but without them changing their ways you absolutely cannot solve this. You can fund it, but you won't solve it.
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

chris319 wrote: Thu May 13, 2021 10:29 am
If she can't afford the house now - how is she going to afford it in 5 or 10 years?
It's the high-interest mortgage payments she can't afford. Paying off that mortgage will be a giant step forward.

After that she'll need some financial planning as you suggest. It sounds like her soc sec income is meager, and she can't live off credit cards indefinitely. Pray that she doesn't blow her inheritance if she gets one.
This would be a whole lot easier if she owned her house free and clear. If she owes 30k, perhaps we can work something out. If she owes 100k, that would be a problem. And I have no idea what her credit card balance is but that was supposed to be taken care of in the refi that was denied (unless she has a cosignor).

She was always good at saving money on purchases so I am not as concerned about her blowing money outside of her nornal expwnses as much as I am concerned abiut her expenses exceeding her income over the long term.
Last edited by max79 on Thu May 13, 2021 11:02 am, edited 1 time in total.
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

it strongly appears she is unable to afford this house. That being the case, the only sensible option includes reducing her housing costs.
Again, it's the high-interest mortgage payments she can't afford. Her housing cost will be substantially lower with that mortgage paid off.

And again, people are ignoring the fact that if they sell the house, the boys' no longer have an inheritance. I assume she has no investments or estate to speak of outside of that house. Been there, done that.

How many times must I repeat these points?
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

max79 wrote: Thu May 13, 2021 10:50 am
This would be a whole lot easier if she owned her house free and clear. If she owes 30k, perhaps we can work something out. If she owes 100k, that would be a problem. And I have no idea what her credit card balance is but that was supposed to be taken care of in the refi that was denied (unless she has a cosignor).

She was always goid at saving money on purchases so I am not as concerned about her blowing money outside of her bornal expwnses as much as I am concerned abiut her expenses exceeding her income over the long term.
Now you're thinking. With the mortgage gone she'll have property tax and upkeep of the property to worry about. And insurance. The mortgage is the 400-pound gorilla.

Again, in exchange for your help you and brother get title to the house.
Last edited by chris319 on Thu May 13, 2021 11:08 am, edited 2 times in total.
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Re: Mother is looking to refinance and asking me to co-sign

Post by Fallible »

max79 wrote: Thu May 13, 2021 10:40 am Thanks for the additional responses and ideas.

As some of you have pointed out, I really need to get more information on her finances before I can evaluate the options. That will have to be the next step.

She was really hoping that the refi was going to be approved and said that would have worked. Not sure if she is thinking avout unexpected expenses tjat could come up though.

I am not sure if she tried to applied for a refi with other conpanies. I did suggest that idea though.

Good points about things breaking furnace, AC, faucets, etc. I own a house and know all too well that things go bad....at the worst possible time. I will likely be the on call handy man as well. She already asked me if I would cut the grass since the mower bothers her back. Part of the "benefit package" I give her may have to include hiring someone to cut her grass It is enough of a hassle to take care of my own house and lawn (as well as fixing mowers when they break) while working full time.

As for my brother, he is works a lot of hours and is strapped for time. He and his wife bring in a decent income between their jobs and side jobs but they have plenty of debt as well as they seem to live above their means. I am not sure how much (if anything) he would be willing or able to contribute. [/quote]

Has she asked your brother if he would help in any way financially or with household chores such as mowing the lawn?
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Re: Mother is looking to refinance and asking me to co-sign

Post by neverpanic »

mrsmitt wrote: Thu May 13, 2021 10:32 am I would let her know that co-signing is not a problem if this is in her best interests. However, you must review her financial situation in order to decide what the best solution is for both of you.
That is terrible advice. Co-signing is a problem. The mere request for co-signing is a problem, coming from Mrs. "I'll never ask you for a penny." No, she's asking for the whole twenty dollars.

OP isn't rich, but more critically for her case, OP's mother is living above her means and does not want to earn regular income.
chris319 wrote: Thu May 13, 2021 8:12 am Besides, the house is her legacy to her sons. They will presumably inherit that house some day.
chris319 wrote: Thu May 13, 2021 10:55 am And again, people are ignoring the fact that if they sell the house, the boys' no longer have an inheritance. I assume she has no investments or estate to speak of outside of that house. Been there, done that.

How many times must I repeat these points?
"Buy your own inheritance" sounds a lot like those email offers where a person will collect tens of millions of dollars if only they will pay a small fee to release the impound. Inheritances are not an entitlement. For all OP knows, the mother may already have spent what she anticipates inheriting. Would you be interested in putting $50,000 into a $300,000 home that is then split 50-50 with a non-contributing sibling after the mother's passing?

At present, her "legacy" is becoming a burden to the one son who is willing to subsidize her lifestyle.
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Re: Mother is looking to refinance and asking me to co-sign

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chris319 wrote: Thu May 13, 2021 10:55 am
it strongly appears she is unable to afford this house. That being the case, the only sensible option includes reducing her housing costs.
Again, it's the high-interest mortgage payments she can't afford. Her housing cost will be substantially lower with that mortgage paid off.

And again, people are ignoring the fact that if they sell the house, the boys' no longer have an inheritance. I assume she has no investments or estate to speak of outside of that house. Been there, done that.

How many times must I repeat these points?
We don't actually know.

You're under the impression it's the current mortgage she can't afford. I suspect otherwise.

Surely if a refi solved the (only) problem great. We're largely done here.

That still requires a cosign, which depending upon the particulars might be a problem.

I'm in the this-appears-to-be-a-long-term-problem camp. From what's been posted mom has nothing to her name besides the house. A refi solves a short term issue, if that even.

I think many are ignoring the inheritance aspect as none of us care either way. All that matters is mom supporting herself.
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

Would you be interested in putting $50,000 into a $300,000 home that is then split 50-50 with a non-contributing sibling after the mother's passing?
Yes. You structure it so that if he doesn't contribute he's dealt out. Either he puts up cash up front or no deal.
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Re: Mother is looking to refinance and asking me to co-sign

Post by mmmodem »

Your situations mirrors mine. I will not give them a monthly stipend. That's enabling their reckless spending. It decreases my cash flow. I refuse to co-sign my parents' home as that puts my credit significantly at risk. If they were responsible, they wouldn't be in this mess. I wouldn't trust them to make mortgage payments on time. Downsizing would require renting a smaller place and would still require me to help out monthly. A reverse mortgage is just kicking the can down the road they would be broke later. Then, I would have to support them financially anyway.

In their eyes, I would have let them down regardless of facts. I, sincerely, hope they won't resent me for not helping out but I don't want to find out. I want to continue having a good relationship with my parents and be a good son to them that is grateful to have the opportunity and ability to help them.

So we bought their home from them. This will cost me nothing as their rent to me must cover PITI and repairs. Existing equity will supplement their rent. I take a hit on my credit as I will need to make substantially more income to qualify for my own home plus the late rent risk. In return, the home is mine outright after they pass. If my siblings wish to contest the arrangement, they are free to purchase the "burden" from me at any time. I fully understand this is a risky choice and not very Bogleheadish but I think it's the best financially for the entire family as a whole and costs me very little.
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Re: Mother is looking to refinance and asking me to co-sign

Post by max79 »

mrsmitt wrote: Thu May 13, 2021 10:32 am I know that everyone’s family situation is different, but this is your mom we are talking about. Her request and your justification has nothing to do with two years of college that were paid by your parents. They did much more than that for you...

I would let her know that co-signing is not a problem if this is in her best interests. However, you must review her financial situation in order to decide what the best solution is for both of you. You will have to discuss all options with her before making a decision.

PS. She should not be paying over 6% interest on mortgage in any case. It sounds like she needs lots of help. I hope you are there for her.
I understand that but where do you draw the line?

My dad struggled financially for quite awhile after the divorce. I gave him a loan to help with a down payment on a property which took a long time to pay back. To his credit, he did work his butt off on rough jobs that required long hours. He is on a fixed income, with too much mortgage as well, and he may need help down the line if he does not live within his means. He has talked about downsizing though, selling his property, and moving into his girlfriend's house, which is a situation that has issues of its own. For example, what if he blows the money he makes on sale and something happens to her or their relationship down the line?

Willing to help but at what point do you draw the line?

I think my parents made a good team when they were married as far as finances went. My dad was good at brining in the income and my mom did not bring in much income but was good at keeping expenses under control. It does not seem as if they have changed their patterns.
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Re: Mother is looking to refinance and asking me to co-sign

Post by Marseille07 »

max79 wrote: Thu May 13, 2021 10:40 am Thanks for the additional responses and ideas.

As some of you have pointed out, I really need to get more information on her finances before I can evaluate the options. That will have to be the next step.
Assuming co-signing is out of the picture, there isn't much to evaluate on your end. It's all about what she wants to do. I suspect a reverse mortgage would be her call, and you should leave it at that. It's her finances & her house, not yours.
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Re: Mother is looking to refinance and asking me to co-sign

Post by chris319 »

You're under the impression it's the current mortgage she can't afford.
Why else would she be seeking a refi? OP leads us to believe her soc sec income is meager.
I think many are ignoring the inheritance aspect as none of us care either way.
There is smart estate planning and dumb estate planning. I've been involved with three: two parents' and my own.
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Re: Mother is looking to refinance and asking me to co-sign

Post by Nebraska_Drought »

Just plugging some numbers into a mortgage calculator and the conclusion is that cutting the interest rate on a refi will only give so much room to work with. I did a $100K loan on a $200K house. The P&I payments dropped $200 if the loan went from 6% to 2.5% on a 30 year note. In all likelihood, there will still be a mortgage balance at the end of her life. In the grand scheme of things, the $200 saved in a refi does not even cover the annual upkeep on the house (most approximate at $5K a year, give or take). In all honesty, $200 is not a lot of working funds to do much with especially if there is a mountain of CC debt too. I do not see how this is "substantially lower" as previous posts have stated.
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Re: Mother is looking to refinance and asking me to co-sign

Post by bluebolt »

chris319 wrote: Thu May 13, 2021 10:55 am And again, people are ignoring the fact that if they sell the house, the boys' no longer have an inheritance. I assume she has no investments or estate to speak of outside of that house. Been there, done that.

How many times must I repeat these points?
Money is fungible. Equity in a home doesn't disappear when you sell the home. Equity from the sold home that is used to fund an above-her-means lifestyle that leaves no inheritance for the sons is the same as equity borrowed from the unsold home to fund an above-her-means lifestyle that leaves no inheritance for the sons.
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Re: Mother is looking to refinance and asking me to co-sign

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max79 wrote: Thu May 13, 2021 11:22 am
mrsmitt wrote: Thu May 13, 2021 10:32 am I would let her know that co-signing is not a problem if this is in her best interests.
where do you draw the line?
I suspect many of us would argue cosigning is not in her best interests.

That's the first issue with the entire scenario.

If cosigning actually solved the long term problem(s) that risk might be easily justified. I suspect it doesn't begin to solve the long term problem.
Last edited by gr7070 on Thu May 13, 2021 11:44 am, edited 1 time in total.
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Re: Mother is looking to refinance and asking me to co-sign

Post by gr7070 »

chris319 wrote: Thu May 13, 2021 11:30 am
You're under the impression it's the current mortgage she can't afford.
Why else would she be seeking a refi? OP leads us to believe her soc sec income is meager.
You seriously cannot envision someone who lives above their means refinancing their mortgage and still living above their means with the new, lower mortgage?

Exactly... meager income, lower but still too big a mortgage still leaves the same, greater problem.
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