Cosigner for hire for mortgage?

Question

I am a first-time investment property buyer, presently jumping through the hoops to prequalify for a mortgage for a potential property (I do already have a mortgage on the house I live in). I am a freelance writer, and some years, the money rolls in, and some years it doesn't. The job is great in that it's allowed me to save up enough for a down-payment on an investment property ... but, the past two years have been lean (I have been choosing fun over making bank). I have a decent credit score and the capital, but I now it looks like I need a cosigner.

I have asked my dad, who said maybe. My father is slightly misogynistic, and he doesn't believe I have the brains or the guts to take this on.My options at this point seem to be:

1) Move forward with my father. Treat it like business. Don't let it be personal. Smile and jump through hoops until I get the signature (my only fear here is that I don't want him to be able to get his hands on the property in any way. I don't trust him to stay out of things ... so, not sure how much access to the property he would have if his signature is on the mortgage?)

2) Make bank this year and wait until 2020 to buy. This year has been off to a tremendous start, and so far, it looks like I might pull in three times what I did last year, so I may qualify for a duplex or triplex on my own.

3) Find a cosigner for hire ... Is there such a thing? I thought I heard this on a podcast, but at the time, I didn't think I'd need this, so of course, I paid zero attention to which episode that was ...

4) Or, I could add an ADU onto my current property lot. This is maybe the least appealing to me, but it least it gets me in the game ... and I love action and movement and making things happen.

So, what should I do?

Any advice much appreciated!

Brooke Morton · Answer

@Calebheimsoth, you're right ... yeah, probably not a good idea to have my father cosign. He is misogynistic (not just slightly but fully). And, I spoke to my mortgage guy, who tells me that any cosigner would have full access to everything that I do, so perhaps that isn't the best move.

And @Mattleber, yes, you make good points also. If the numbers work, then I will def move forward. So, I'm moving forward exploring what I can buy on my own. Working with more lenders to see who can give me the best numbers. The more I shop, the better the answers I get, so that's good. We'll see what happens from here!

Yogev Finegoz · Answer

@brooke morton. Who's the lender? I would live to know!

Travis Bradburn · Answer

Aloha Brooke,

Can you let us know what you find out about that lender or give the name so I can look into that kind of loan also?  That is interesting to me and I'm sure others who would like to borrow based on the rental income potential and maybe not on their income.

Mahalo

Brooke Morton · Answer

@Amine Salhi Well, I basically waited a year. I just realized that 8 months have passed since I asked this. I got a second job and doubled my income from last year. And I ran numbers by lender #1 and he says I should be able to buy something. And, I also talked with someone today who told me about a lender who offers special loans for investment properties. The loans aren't based on your income, but rather, how much the place could rent for. So, I am going to check that out ...

Anthony Dooley · Answer

@Brooke Morton option 2 is your best avenue. If a bank will not finance you without a co-signer, it's because you are a bad risk to them. Partnering with your dad is a terrible idea. What if he is right? What if this turns out to be a bad investment? He will be on the hook with you. Could that cause problems in your relationship? There should be no rush to buy an investment property.

Amine Salhi · Answer

Hi @Brooke Morton, I hope everything is going smooth for you. I am in a similar situation more or less, what did you end up doing ? and can you recommend any Lender that offered you that kind of flexibility ?

Best regards

Amine Salhi

Brooke Morton · Answer

Jill, that is very interesting -- I didn't realize that a co-signer could be NOT on the title. That might be worth exploring a little bit more. How would I keep him off the title? Just let the realtor know as we proceed with the process that he won't be a co-owner?And Mike, yes, good point! Yes, I just started working with another lender who offers a ton of mortgage options from a variety of lenders. So, he's helping me explore all my options. He says it looks likely that I won't need a cosigner--the only downside is that the mortgages I would qualify for have a higher monthly payment ... which, I don't fully understand yet, but I will for sure research until I understand the differences.

Jill F. · Answer

Brooke,

To get a partner, you give up equity. If your Dad cosigns, he is basically helping you out for free and it will remain on HIS credit for the life of the loan, showing up whenever he applies for other credit. However, outside of your payment history, if he is not on the title he will not have an ownership interest in the property and he will have to sue you if you do not pay the debt to recover any payments he makes to save his own credit.  As other's have said different lenders have different underwriting requirements so you might be able to find a lender that won't require a cosigner.

Mike McCarthy · Answer

Have you talked to another bank? It’s possible their criteria might be different. Maybe try a smaller bank who might have more underwriting flexibility than the big guys.

I agree with the others, I wouldn’t partner with family, especially if there are already some flags.

Caleb Heimsoth · Answer

@Brooke Morton. With everything you’ve said, I would wait til next year and do it on your own.

What you can do is just ask your lender now.  “If I make *xxxx* next year, what will that qualify me for?”  They can give you this info.  Then you’ll know if that’s enough or not for what you’re doing.  Then go earn a lot this year and make it happen.

I can almost guarantee with the few things you’ve said about your father (like he’s slightly misogynistic) that if you use him as a co-signer it will likely end badly.  Also, just FYI not sure how you can be “slightly misogynistic”, you’re either or you’re not and I don’t think you want that sort of thing involved in likely the biggest purchase of your life (a house).

Cosigner for hire for mortgage?

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