co-sign or not ?

Excuse me for my naiveness, it is my first time thinking buy a
property.

I did a favor to a friend who happens to have several properties. She
wants to return a favor by letting me co-sign one of her condo. Her
deal is 0% down and I get mortgage from bank.

As naive as I am in real estate, it is my first time to hear "co-sign".
I heard that people do not co-sign because of legal liability issue.
But in this case, the risk is on my friend instead of me, right?

I actually have the ability to stretch out to buy the condo completely.
But with only about 5% down available, my friend advised that I will be
wasting much money on insurance.

Is co-sign a real good option?

Thank you for your advices.

Re: co-sign or not ?

In article <>,
"Neighbor" <> wrote:

> I did a favor to a friend who happens to have several properties. She
> wants to return a favor by letting me co-sign one of her condo. Her
> deal is 0% down and I get mortgage from bank.

Co-sign means that if she cannot make the payments, then the
bank comes after you to make the payments. You basically
sign saying that you will take care of her bills in the
event that she doesn't pay them. Is that what you want?
In general, co-signing is a kiss of death for your credit
record. And if you later try to get a loan on your own,
the loan that you co-sign is counted against your borrowing
ability. That alone might keep you from getting a house
in the future.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: co-sign or not ?

"Neighbor" <> wrote in message
news:

> I did a favor to a friend who happens to have several properties. She
> wants to return a favor by letting me co-sign one of her condo. Her
> deal is 0% down and I get mortgage from bank.
>
> As naive as I am in real estate, it is my first time to hear "co-sign".
> I heard that people do not co-sign because of legal liability issue.
> But in this case, the risk is on my friend instead of me, right?

Wrong. You share the liability with your "friend."

Re: co-sign or not ?

On 15-Aug-2005, "Neighbor" <> wrote:

> I did a favor to a friend who happens to have several properties. She
> wants to return a favor by letting me co-sign one of her condo. Her
> deal is 0% down and I get mortgage from bank.

She's doing YOU a favor by letting YOU co-sign? Unless you mean it the other
way around she's trying to conn you. As the saying goes, "with friends like
that who needs enemies"? :)

--
Warmest regards,

Steve Horrillo, Realtor / C.Ht. =^..^=

Re: co-sign or not ?

"Neighbor" <> wrote in message
news:

> I did a favor to a friend who happens to have several properties. She
> wants to return a favor by letting me co-sign one of her condo. Her
> deal is 0% down and I get mortgage from bank.

When you invest with friends, you lose both your friends and your money.

Re: co-sign or not ?

Maybe I did not explain this well.

I will own the condo as soon as I clear 20% downpay. She would waive
the 20% downpay at present time. I will loan the rest of 80% from Bank
to pay her. I will live in the condo from the moment we co-sign.
Is this really a good deal? Will escrow protect me if any risk
involved?

Thanks.

Re: co-sign or not ?

On 16-Aug-2005, "Neighbor" <> wrote:

> Maybe I did not explain this well.
>
> I will own the condo as soon as I clear 20% downpay. She would waive
> the 20% downpay at present time. I will loan the rest of 80% from Bank
> to pay her. I will live in the condo from the moment we co-sign.
> Is this really a good deal? Will escrow protect me if any risk
> involved?
>
> Thanks.

It sounds like she's going to fudge the paperwork to make the bank think
you're putting 20% down. Is that what's happening? Even though you may have
to pay PMI isn't it better to just pay her and get it over with? Or get a
second to cover the 20%. It's bad enough you're doing business with a friend
but then to add some funky arrangement to it just makes my skin crawl.

--
Warmest regards,

Steve Horrillo, Realtor / C.Ht. =^..^=

Re: co-sign or not ?

Yes, she intends to fudge the paperwork to make the bank think I am
putting 20% down. Is this cheating?

So you think that just buy it by paying 5% down + mortgage is a better
idea?

What about co-own?


Steve Horrillo wrote:
> On 16-Aug-2005, "Neighbor" <> wrote:
>
> > Maybe I did not explain this well.
> >
> > I will own the condo as soon as I clear 20% downpay. She would waive
> > the 20% downpay at present time. I will loan the rest of 80% from Bank
> > to pay her. I will live in the condo from the moment we co-sign.
> > Is this really a good deal? Will escrow protect me if any risk
> > involved?
> >
> > Thanks.
>
> It sounds like she's going to fudge the paperwork to make the bank think
> you're putting 20% down. Is that what's happening? Even though you may have
> to pay PMI isn't it better to just pay her and get it over with? Or get a
> second to cover the 20%. It's bad enough you're doing business with a friend
> but then to add some funky arrangement to it just makes my skin crawl.
>
> --
> Warmest regards,
>
> Steve Horrillo, Realtor / C.Ht. =^..^=
>
>

Re: co-sign or not ?

> Maybe I did not explain this well.
>
> I will own the condo as soon as I clear 20% downpay. She would waive
> the 20% downpay at present time. I will loan the rest of 80% from Bank
> to pay her. I will live in the condo from the moment we co-sign.
> Is this really a good deal? Will escrow protect me if any risk
> involved?

Let me see if I understand this correctly.

Your friend owns the condo right now, correct?

She wants you to get a loan for 80% of the purchase price, and she will
co-sign it so that you can get it. At this point you will be responsible
for this loan, but you will not actually own the condo yet?

Then you will live in it, paying the mortgage. I assume you will also be
paying your friend something, to cover the 20% you owe her. When you
finally reach 20% of the purchase price, she will give you the deed and you
will finally own it.


The rest of the message assumes your friend owns the condo. If she doesn't,
then most of this won't apply....

The big question is -- what happens if you never pay the 20%? I assume your
friend gets the place back and you lose out, even if you've paid 15%?


More remarks and questions:

How do you pay your friend the 20%?
Is this a set amount each month?
Do you pay her whenever you feel like it?
Is there an interest rate involved?
What is the interest rate?
Is it fixed?
How far behind can you get before your friend gets the condo back?
Is the 20% to be paid over 30 years?

Is the condo worth 100% of what you're paying for it?
How did you decide how much it's worth?
Did you get this value from an independent appraisal or from someone your
friend recommended?
FYI, a bank will do an appraisal to see if it's worth what *they* are
loaning you, but not to see if it's worth what *you* are paying. The bank
will send you a copy if you request it. Make sure the contract with your
friend says the sale is off if it doesn't appraise at or above the purchase
price. Also make sure your friend has no contact with the appraisal agent
so she can't influence the result -- this will be hard since someone has to
let the person in.

Can you move out and rent the condo to someone else if you want to? (sublet)
How long have you known your friend?
Are you paying the 80% straight to the bank, or paying it to your friend who
then pays the bank?
Who gets to deduct the mortgage interest?
Is the money you pay to your friend defined as "rent" or "mortgage payment"?

Instead of waiting for 20% to become the owner, can't your friend give you
the deed at the start and take what's called a second mortgage for the 20% ?
This would better protect you and still gives your friend protection if you
don't pay.

FYI - there's no risk to your friend by co-signing. If she has to pay up,
it means she gets the condo back, and she gets to keep what you paid her.
She's made money and is out nothing. It will still affect her credit
though.


Make sure you and your friend put everything in writing, preferable in the
purchase contract you sign with her.

Re: co-sign or not ?

In article <>,
"Neighbor" <> wrote:

> Yes, she intends to fudge the paperwork to make the bank think I am
> putting 20% down. Is this cheating?

That is loan fraud, a federal felony. You can get a big fine
and even go to jail for pulling that kind of stunt. Some friend.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: co-sign or not ?

Thank you for your response.

Yes, my friend owns the condo. She actually owns several properties.
She has not cleared her mortgage with the bank on this condo though.

As a first time buyer, I think I am getting into a more than
interesting case.
Is it better that I just loan 100% from the bank and buy it off from
her?



Kitep wrote:
> > Maybe I did not explain this well.
> >
> > I will own the condo as soon as I clear 20% downpay. She would waive
> > the 20% downpay at present time. I will loan the rest of 80% from Bank
> > to pay her. I will live in the condo from the moment we co-sign.
> > Is this really a good deal? Will escrow protect me if any risk
> > involved?
>
> Let me see if I understand this correctly.
>
> Your friend owns the condo right now, correct?
>
> She wants you to get a loan for 80% of the purchase price, and she will
> co-sign it so that you can get it. At this point you will be responsible
> for this loan, but you will not actually own the condo yet?
>
> Then you will live in it, paying the mortgage. I assume you will also be
> paying your friend something, to cover the 20% you owe her. When you
> finally reach 20% of the purchase price, she will give you the deed and you
> will finally own it.
>
>
> The rest of the message assumes your friend owns the condo. If she doesn't,
> then most of this won't apply....
>
> The big question is -- what happens if you never pay the 20%? I assume your
> friend gets the place back and you lose out, even if you've paid 15%?
>
>
> More remarks and questions:
>
> How do you pay your friend the 20%?
> Is this a set amount each month?
> Do you pay her whenever you feel like it?
> Is there an interest rate involved?
> What is the interest rate?
> Is it fixed?
> How far behind can you get before your friend gets the condo back?
> Is the 20% to be paid over 30 years?
>
> Is the condo worth 100% of what you're paying for it?
> How did you decide how much it's worth?
> Did you get this value from an independent appraisal or from someone your
> friend recommended?
> FYI, a bank will do an appraisal to see if it's worth what *they* are
> loaning you, but not to see if it's worth what *you* are paying. The bank
> will send you a copy if you request it. Make sure the contract with your
> friend says the sale is off if it doesn't appraise at or above the purchase
> price. Also make sure your friend has no contact with the appraisal agent
> so she can't influence the result -- this will be hard since someone has to
> let the person in.
>
> Can you move out and rent the condo to someone else if you want to? (sublet)
> How long have you known your friend?
> Are you paying the 80% straight to the bank, or paying it to your friend who
> then pays the bank?
> Who gets to deduct the mortgage interest?
> Is the money you pay to your friend defined as "rent" or "mortgage payment"?
>
> Instead of waiting for 20% to become the owner, can't your friend give you
> the deed at the start and take what's called a second mortgage for the 20% ?
> This would better protect you and still gives your friend protection if you
> don't pay.
>
> FYI - there's no risk to your friend by co-signing. If she has to pay up,
> it means she gets the condo back, and she gets to keep what you paid her.
> She's made money and is out nothing. It will still affect her credit
> though.
>
>
> Make sure you and your friend put everything in writing, preferable in the
> purchase contract you sign with her.