Co-Signing a mortgage - mortgage interest deduction question.

[REWahoo]

I'm late to this thread and only have two comments:

Should you go forward with this your forum name likely foretells the outcome.

Perhaps you should ask the mods to change it to Uncle Sugar Daddy...

[travelover]

Sadly, as others have pointed out, this could easily ruin your relationship with your niece which is, I'm sure, exactly the opposite of your intentions. She can't afford to buy or maintain this home and if you or someone else doesn't keep subsidizing her lifestyle, she may well default and there will be hard feelings.

[donheff]

Quote:

Originally Posted by Disappointed One of the reasons why I am willing to help is because financially I stand ready and able to buy the house in case they can't make it. I will then resell the house, any losses will come out of her end of the estate.

As a simple cosigner you will be responsible for the payment but won't be free to sell the house. If you are on the title (and could force a sale) you will still need a contract to identify how much is your vs theirs and will face all of the problems others pointed out above. Consider this as a simple cosigner: your neice dies in a car accident and not fully trusted hubby can't make the payment but refuses to leave the house. What do you do?

Quote:

I will be talking to an attorney on partially holding the title on this property and its effect on the whole trust issue. I did think about just buy the damn house and rent it to them but somehow I do not feel like doing so.

Good on the attorney. On buying the house, what about my suggestion that you buy it and sell it to them financing the sale? That would achieve their objectives and protect you if things don't work out as you forsee.

Also, take a look at some of your language in this and previous posts (e.g., "the damn house) - you are obviously not happy with this situation. What makes you think that will get better?

[Silver]

I'm available for adoption. May I be your niece as well? You won't be disappointed.

[sheehs1]

Quote:

Originally Posted by bbbamI An article from Kiplinger..... Meanwhile, monitor the payment history to make sure that the mortgage holder is building good credit (so he or she will be able to refinance) and that you're not at risk. Insist on a reserve account, with two to three months' worth of payments, that requires both signatures for a withdrawal.

This made me think about Helocs or Equity Lines against the equity in this million dollar plus house. If you inject substantial $$ and cosign.......might be a good idea...to put some legal verbiage around this possibility. Might want to think thru (with your lawyer) how this could impact things. Such as ...if you only cosign but are not on the mortgage, "can they get an equity line without your knowledge?" - or- "what about refinancing down the road"...to take equity out?"
Of course...considering what you have written...this may not be an issue for you.

[Texas Proud]

Disappointed....

IMO, you are missing a lot of what some here are saying... so, I will be blunt like some other poster...

They can not afford the place.. so any way you slice and dice.. it is not a good idea for them to buy this place... much less buy it when they already have a house...

You are not teaching your niece good finances..... she will be back for more and more... who cares if you can afford it... the point is SHE can not afford it and should wait until she can...


Also, a rule of thumb is to buy a house that is 3X to 3.5X your salary... from what you say that is $185K in good times.. so the max house they should buy is about $600K.....


Soooo, a bad idea on their part... and a bad idea on your part... and also a bad idea on her parents part...



PS... if their schools they are in are 'bad' (probably not), then buying a house that is very costly is not the way to go... just pay for private school...

[sheehs1]

Quote:

Originally Posted by donheff Good on the attorney. On buying the house, what about my suggestion that you buy it and sell it to them financing the sale? That would achieve their objectives and protect you if things don't work out as you forsee. A

+1....+1....+1

...and when your estate comes into play...they can pay off your estate with their inheritance...protecting both you, your wife and your estate.

[52andout]

You have gotten a lot of great advice. I'll add two more.

I would give them a copy of "Your Money or Your Live" and "The millionaire next door". They both emphasize living below your means. Obviously they will be living well above their means if they take on such huge debt.

I would not trust moving to any public school district today. You don't have to be a genius to see all around the country funds are being cut and teachers vilified. I would not be surprised to see more and more private schools popping up as our public schools suffer.

[East Texas]

The most unfortunate part of this whole thing is the niece is being taught it's OK to live beyond her means. One of these days the "economic outpatient care" will run out and the bill collectors will start calling and she'll have absolutely no idea as to what went wrong.

Quote:

If you want to know the true character of a person, don't give them money - give them power.

It must be nice to be in a position to control the financial destiny of generations. Well, I guess as long as they stay on your good side.

[FreqFlyer]

Quote:

Originally Posted by pb4uski While I know your motives are good, I think you and your niece's parents may be doing her and her husband a great disservice by enableing them to a lifestyle that is beyond their means. I presume that you and her parents are in a position to provie such generous help by living within your means and saving and investing.

my thoughts exactly

[Westernskies]

Co-signing this mortgage?

[Sarah in SC]

This does not bode well for how she will handle the money when she inherits from you. Better for her to learn now than lose it all when you pass away.
I'll join the chorus of No!s

[KB]

I find it amazing that anyone would have the nerve to ask for such a huge favor. It makes me think she has been spoiled by her family. To be given such a valuable house and not have it be good enough is rather telling.

[haha]

I think we have at long last reached a consensus!

Ha

[Texas Proud]

Quote:

Originally Posted by KB I find it amazing that anyone would have the nerve to ask for such a huge favor. It makes me think she has been spoiled by her family. To be given such a valuable house and not have it be good enough is rather telling.

+1


I bet with the discussion of the size of these gifts from multiple people... she is used to getting a lot for nothing...


I will ask OP one other question... why is her PARENTS not co-signing It sounds like they have enough money and are willing to walk the plank for their daughter.. OR, HIS parents... OH YEA, they gave them a $700K house already and that was not enough...

IMO, I do not care if I could afford to buy the house and give it to them... it is the sense of entitlement that this girl is showing that turns me off...

[Calgary_Girl]

At me to the list of people telling you to run!!!

You must have a very tight-knit family in order to lend your niece a couple of hundred thousand dollars. I barely like my extended family and definitely not enough to ask them for a hand-out!

What's wrong with the $650K house that your niece received from her in-laws? If I were you, I would tell the niece to sell the $650K house that she received as a gift and put it as a downpayment towards the $1.1 million house and to start living within their means and grow up. There is no way they can support both houses based on their joint income.

[Katsmeow]

Quote:

Originally Posted by Texas Proud +1 I will ask OP one other question... why is her PARENTS not co-signing It sounds like they have enough money and are willing to walk the plank for their daughter.. OR, HIS parents... OH YEA, they gave them a $700K house already and that was not enough... ..

Her parents are providing part (all?) of the $300k down payment.

The picture I get is that they want to move to a particular school system which has expensive homes (around here $1.3 million is a mansion but I'm sure in California it isn't). She wants the current low interest rates but lacks the down payment and, likely, income level to be approved to buy the house with just her and her husband.

The thing is that regardless of all of that she can't afford the house. She probably can't afford half the house.

Why they can't live in the house gifted by the husband's parents is not stated. Perhaps it is the school system. If so, the better choice would be to pay for private school.

Regardless, I can't see the OP doing this as being in the ultimate best interest of his niece or her husband. I don't think it is in their best interest to put them in a financial situation that is over their head and to put them in a home where they don't have the financial means of their neighbors.

[Martha]

Quote:

Originally Posted by haha I think we have at long last reached a consensus! Ha

I'll throw a wrench into the consensus. What if the OP has a 100 million dollars net worth? And what if the niece is the only intended heir? Cosign, buy, whatever, so what? Is she really living beyond her means? There is a big down payment and the niece and spouse own a free and clear second home that they could sell if they can't service the debt.

When the OP said he could buy the house outright with no real impact on his life I figured that he was in a different game than I am in.

FWIW

I'd still get a second mortgage to secure any sums I would be advancing now, plus any I might advance in the future, if for no other reason to protect the family interest in event of a divorce.

[pb4uski]

Quote:

Originally Posted by Martha I'll throw a wrench into the consensus. What if the OP has a 100 million dollars net worth? <snip>

I figure that if OP had 100 million net worth that he probably wouldn't bother asking us.

Seriously though, I think OP knows what the group view is and I'm starting to feel guilty that we have piled on so much (and I have been as much a part of it as others have).

[haha]

Quote:

Originally Posted by Martha I'll throw a wrench into the consensus. What if the OP has a 100 million dollars net worth?

True, there are many possibilities. OP could be M. Gaddaffi looking for a hidey hole for a few bucks before it's too late. There are so many things we have failed to consider. Anyway, we are congenitally mean around here, you are perhaps asking for a too difficult cultural transformation.

Ha