When you’ve reached finally reached the pinnacles of your career and are at the point of financial stability, buying a home for your parents becomes more of a realistic option. However, it’s important that you understand the pros and cons of this decision so you can approach it with caution.
There are numerous ways that you can assist your parents with their payment purchase. This includes anything from offering funds for a down payment to being a cosigner on a loan. Before proceeding, it’s important that you ensure your own financial security prior to signing off on anything.
Becoming a Cosigner
One of the most basic ways that you can help your parents out, especially if they have a low income, is by cosigning their mortgage. It’s also important to bear in mind that lenders will look at their credit scores, which may affect whether or not they get approved. However, lenders will also combine the income of all the borrowers involved in the mortgage, so your income is relatively high, it may improve your overall chances of being approved.
The Risks of Cosigning
It’s also important to note that when you, the child, is on the title and is designated as a joint tenant with the right of survivorship, you’re solely responsible for the mortgage payments upon your parents’ death. Whether you’re living in the house or not the monthly payments will be transferred to you. This is why it’s important to ensure your financial stability prior to cosigning. Failure to make the appropriate monthly payments could significantly hurt your credit score. In addition, it could also hurt your score as well even if your parents consistently pay on time due to the fact that you’re taking out such a large loan.