risk of co-signing - Posted by Peter Tiemann

Real Estate Investing
1

Posted by docniss on August 18, 2005 at 07:05:48:

I am not a seasoned investor by any means, but I do have common sense. Having a couple of million dollars wrapped up in investment properties that are not producing and having an emotional attachment to a thing does not sound like your girlfriend has a lot of common sense. If she is such a gambler why not hop over to Vegas? Be careful if your relationship with her is progressing. I would not get to involved with someone with all these financial issues. She seems to be irrational at least when it comes to money. And the tax thing could be huge. You don’t want any of her stuff affecting your credit and screwing up your life. Good luck man. BTW this is from a woman’s point of view.

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risk of co-signing - Posted by Peter Tiemann

Posted by Peter Tiemann on August 17, 2005 at 12:42:14:

My girlfriend tries to buy an investment property but does not qualify for a decent loan. If I would co-sign then she would get a 0.5% better rate.

She’s got currently mortgage debt of 1,205,000, secured by two homes worth 1,600,000. The second one of these two just closed 5 weeks ago. By the way, none of these two houses produce rent right now.

The new purchase is ‘only’ 170k, her idea is to take 20% out of an existing HELOC and finance 80% with a mortgage on the to-be-bought investment property.

Her salary is ‘only’ 92k/year (I know, it’s a good number, but with that kind of mortgages …)

Anyway.

She wants me to cosign, and says she can take me off the title in 3 months ‘quit-deem’ (or similar spelling?).

What is the risk for me in this?

If you can take your co-signer that easily off the title, why would any lender even consider a co-signer a help?

I assume when I am off the title then I am no longer responsible for the loan.

Or can the lender prohibit her to take me off the title?

I’m just a bit nervous, even if the loan in question is only 80% of 170k = 136k.

Peter

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Re: risk of co-signing - Posted by michaela-ATL

Posted by michaela-ATL on August 17, 2005 at 17:00:20:

Peter,
I completely agree with Kevin and Cletus ;-).

ALso, what’s the big deal with 0.5% lower interest rate for someone, that’s already making payments on $1,200,000? Should make much of a difference to her.

How long have you known her? I hope this is not something, where people are fishing for ‘straw buyers’, because that’s what you would be.

Michaela

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Re: risk of co-signing - Posted by Cletus

Posted by Cletus on August 17, 2005 at 14:58:12:

For anyone seriously contemplating co-signing a loan don’t overlook these opportunities as well…

Find a bunch of motorcycles parked outside a biker bar and push the first one over. It’s a lot like the game dominos coupled with the 400 yard dash.

Locate an isolated stretch of train tracks and pitch your camping tent between the rails. Wait for the Midnight Flyer to spot you first. You can add to the fun by applying a few drops of crazy glue to the zipper on your sleeping bag.

Find the meanest most ferocious dog in your neighborhood. Hop the fence and see if you can grab the dog by its tail. That’s the easy part, it’s the letting go that gets a little hairy.

Toe nails a little long? Break out the weed wacker and start trimming. What’s that you say, you live in a condo? Try the same thing with your Wearing blender set on ‘clip’.

Go back to the biker bar, walk up to one of the pool tables in use, pick up the 8 ball and drop it in the nearest beer mug. It won’t matter whose mug it is, the result will be the same.

Post something on the Mobile Home forum saying “although you enjoy reading the ‘hillbilly board’ that stuff isn’t Real Estate so they must be just wasting their time”. You might want to include your home phone number just to get the full effect.

The next time you take a flight somewhere ask one of the flight attendants if they will let you drink in the cockpit with the pilots. You can start out by saying “Oh, stewardess, since I brought my own corkscrew with me…”

Now granted, none of these are as dangerous as co-signing a loan, but in case you are never asked to do so, you now know other ways to accomplish basically the same outcome.

:o)

5

Risk - Posted by Kevin IL

Posted by Kevin IL on August 17, 2005 at 12:50:45:

Peter,

If you co-sign the loan you are guaranteeing repayment regardless of what your girlfriend does. If you are removed from the deed you’re still liable for the mortgage…except now you have no ownership interest.

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Re: risk of co-signing - Posted by Peter Tiemann

Posted by Peter Tiemann on August 17, 2005 at 12:50:27:

The reason I mentioned her salary is I think she’s stretching herself a bit too much. She’s on ARMs already, one of them 3-mo fixed then floating. That would be very soon.

She’s also not the most organized person. IRS froze her accounts this summer because they missed her 2002 (!) income tax return.

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Re: risk of co-signing - Posted by Peter Tiemann

Posted by Peter Tiemann on August 17, 2005 at 17:06:02:

well, I know her for 9 months but as I said, not the most organized. Just found out she did no tax return for 2002, 2003 and 2004! Although the government OWES her probably 10k for each year in overpaid taxes.

I already told her no. Thanks for all the feedback, guys.
Those suggestions with the biker bar and dog… were funny.

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dress - Posted by dress

Posted by dress on June 21, 2007 at 24:08:46:

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Re: Risk - Posted by Peter Tiemann

Posted by Peter Tiemann on August 17, 2005 at 12:53:17:

Kevin:

Oh-my-God! She either is not well-informed what co-signing means or she lied to me and thinks I am an idiot.

Thank your for explaining. No way I will co-sign with her.

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Re: risk of co-signing - Posted by IB (NJ)

Posted by IB (NJ) on August 17, 2005 at 23:15:53:

Peter, I know you already told your GF no. But please listen to this advice : If you want to maintain good credit, NEVER, EVER, NEVER, NEVER co-sign for anyone. That’s my rule and is one of the reasons why I still have good credit and everyone who has asked me to co-sign for them (incl. those who DID co-sign) have bad credit. Think about it, if the banks won’t take the risk, why should you??? And they have more money and assets than you!

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Re: risk of co-signing - Posted by docniss

Posted by docniss on August 17, 2005 at 21:01:40:

yeah stick aroung awhile, Cletus is full of it. He cracks me up too.

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dress - Posted by childhood

Posted by childhood on June 21, 2007 at 24:09:21:

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DON"T DO IT!! - Posted by docniss

Posted by docniss on August 17, 2005 at 21:00:17:

Peter, Relationships are hard enough, in my opinion you should not co sign for a girl friend, what happens if you all split the day after. If all her properties are on ARM and she can’t manage her tax info, you do not want to get involved. Especially with that income level and the high property prices. I am assuming there was a typo and these prop are not 1 mill. Either way, it does sound like she is overextended if she has 2 investment properties that are not supporting themselves.

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Re: DON"T DO IT!! - Posted by Peter Tiemann

Posted by Peter Tiemann on August 17, 2005 at 22:36:56:

no, that was not a typo. Last month she moved from a home valued ~ $830k into a ‘cheaper’ one (fixer-upper, if you ask me) for $720k but with even the minimal repairs done it will actually be worth more than the old one. She paid “only” $720k for the fixer-upper :slight_smile:

Now she has emotional attachment and does not want to sell the $830k one, also hoping it will be worth $900k next year. It will be a thin market. Quite the gamble.
Oh, the properties are both in San Jose, California.

The $720k ‘fixer upper’ is across the street from a place that sold this 04/2005 for $850k. The $850k place has a smaller lot, less sqft home and no swimming pool. You see, the 720k was a ‘steal’. However, keeping both places empty … I could not sleep if I was her. Esp not on a 5-figure income.

I try to talk her into selling the $830k place as long as she can get $830k (prices decreased in San Jose last month!) but no success so far. She is Chinese and MAJOR GAMBLER.