Legal Question in Real Estate Law in California
My dad needs to refinance his house but his income doesn't qualify. He wants to add me to the title of the house and use my income to refinance the house (he's refinanced before). I'm trying to do some research on what this could mean/how it could blow up in my face... I'm assuming that it could hurt my credit, but I'm not entirely sure how, and then on top of that, how would it affect my taxes and/or would it make me liable for his loan in the event that he doesn't pay it? I want to help my parents, but I'm not sure if this is a good idea... I'm in the military and about to deploy, so I'm also wondering if there's any advantages/disadvantages as well with that...
1 Answer from Attorneys
Thank you for serving your country and I hope you return unharmed.
If you are put on the title, you are a part owner of the house. You would be signing the loan documents so you would, with your father, be fully liable for all payments. You credit rating is based in part upon the amount you have borrowed. Even if you pay all of your bills on time, your being on a loan greatly increases your indebtness and likely will result in some reduction in your credit ratings. There are no hard and fast rules as to what percentage effect anything has. When it comes time to buy your own home, FHA, the lenders, etc., might argue that because of being on title on one residental home already you are not a first time home buyer and do not qualify for the various significant financial benefits from that status.
If it was not your family, the answer would be a very clear "no". As it is your father, my answer would still be it is unwise for your economic situation to do it. Lenders are very reluctant to give loans to anyone now; would your taking part in what your father asks really result in his getting a loan?
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