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Liability Scenarios for Mother Cosigning For Sister

Spenny

0
Registered
Joined
Jan 19, 2012
Messages
34
Hi there

I'm wondering if anyone can advise on any liability scenarios for my Mother cosigning a mortgage for my Sister. She doesn't understand the risks involved and frankly I don't either.

Facts:

Mother:
Retired
Earns 40k in pension
Owns a house worth about 500k
Plans to sell within a year
Might buy a smaller property

Sister:
Working single mother
Earns around 60k

Here are three questions that I would love some help on:

1) If she cosigns for my sister, and sells her own house, will she be able to buy another property? How will that be affected?

2) If my Mother were to pass away, how would this cosign affect the distribution of her assets (inhertitance) to her three children?

3) What else does my Mother need to understand about cosigning this mortgage? The one thing I understand about this is that she will be liable for any missed payments by my Sister.

I am happy to provide additional information upon request. Any advice or direction would be greatly appreciated.
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
Co-signing ie co-guaranteeing is different than co-owning. Which one is it?

If she co-owns there may be inheritance and even tax implications as an investment.

If she merely co-guarantees a loan then she is on the hook for missed mortgage payments or mortgage default, and that can cost her money and can have credit implications.
 

Alvaro Sanchez

Ottawa-Gatineau Investor
Registered
Joined
Jun 5, 2009
Messages
966
1) Yes if she has the funds to do so (buy cash) but unlikely if she wants to qualify for mortgage with her income.
2) If you mother co-signs on a mortgage then she will be on title on that property. Unless an affidavit is signed that states limited ownership. Her state deal on what she owns.
3) Yes, she will be responsible for entire mortgage until is paid in full. - Plus it will limit her ability to qualify for another mortgage or loans.

Depending on how old is your mom, say 80/90 it might not be worth to buy her own place.
 
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