Participant Perspectives Q4 Newsletter

The Perils of Cosigning a Mortgage Loan

Parents should consider the pros and cons before cosigning a mortgage loan with their child.

High mortgage interest rates and a steady rise in home prices in many regions of the country have made it more difficult for young people to take the first step on the housing ladder. Relatively

high-earning couples in cities and regions that have experienced a rapid run-up in housing prices may even find themselves shut out of the marketplace. Some would-be first-time buyers can find it hard to come up with a down payment or only qualify for a mortgage that’s insufficient to buy the type of home they want. Other potential homeowners might find it hard to qualify for a mortgage because of a less-than-stellar credit history.

Parents who are financially comfortable may consider helping their child qualify for a mortgage by cosigning a mortgage loan. If you are thinking of helping out a child by cosigning a mortgage loan, you should dig deep into the pluses and minuses of this approach.

CAN YOU AFFORD IT?

If you are approaching retirement and plan on living on a fixed income during retirement, cosigning a loan may put yourfuture retirement lifestyle at risk. Even if

you are in relatively good financial shape, you do not want the expense of making payments on another house ifyour child loses their job or becomes unable to work. Before signing on the dotted line, take the time to look closely at your own finances and your current debts to be sure that you can afford to assume the mortgage payments in a worst-case scenario.

Click here to read the full newsletter!