Hi everyone! My (23F) dad (66M) is asking me to help him refinance his mortgage.
I am currently working while attending college full-time. My dad works full-time (Monday-Saturday, sometimes Sundays too) as a remodeling/residential contractor. He is low-income. My (17F) sister lives with him. Our mom is not in the picture at all.
My dad currently has an ARM mortgage at 6.75% interest. He signed up for it back in 2004 and has about 16 years left on the loan.
I helped him look at a couple different banks to compare rates to refinance his house. When we found a bank with the best deal for him (3.5% interest), the loan officer told us that unfortunately they cannot qualify him because his income is too low and his debt to income ratio is too high. The only way we could get it is if he increases his income and tries again after a year or two or if he gets someone to co-sign on the mortgage loan with him. With my income, he would qualify for the refinance.
Hearing this news was extremely discouraging. My dad is in a rough financial situation and is essentially living paycheck to paycheck.
It’s my understanding that I would be responsible for the mortgage payments should anything happen even though I have moved out (I live with my boyfriend and our roommate). I highly doubt that my dad would intentionally not pay the mortgage in hopes of me covering for it, he is a good-hearted and honest man. However, things do happen and he is getting older. I am in no financial position to be able to help him cover his mortgage payment even partially, as I have my own rent and expenses to worry about. I also worry how this will impact my debt to income ratio as well as my future. I’m planning on getting married to my boyfriend of four years in the near future and for us to buy our first home together. My heart is so torn because I really want to help my family since my dad is really struggling with his current mortgage rate since his home’s taxes/insurance have gone up.
I have encouraged my dad to try to find another job but he worries that he is getting too old and that he is struggling to keep up with technology. I have tried to get him to increase his prices for his contracting work but he worries that his clients will then go find someone else to work with… even though he delivers high quality and honest work and I’m pretty sure he charges the lowest rates in his area.
We spoke with a family friend of ours who is a real estate broker and he told us that I can build my credit profile by co-signing on the mortgage and that future creditors will find my credit profile to be more attractive by doing this so it would be no problem for future home loans. He also told us that since my name would be on the loan, I could also help my dad apply for Homestead Exemption so that his taxes could be lowered (I’m a citizen, he is not a permanent resident yet therefore he is currently ineligible). My dad is currently still waiting for his green card to be processed (his petition was approved) however USCIS is completely behind due to COVID.
My dad said that he wants the house to go to my sister and I anyways and he intends to put us on the deed for the house.
My gut is telling me that co-signing isn’t a good idea but my heart is telling me that I am obligated to help my family.
I was thinking of asking my aunt (dad’s sister) for help since her and her husband are well off. Their kids have graduated from college and are out of the house. My dad doesn’t want to ask them for help since according to him, they have helped him numerous times in the past and he doesn’t want to inconvenience them. Other than that we don’t have any other family members to ask.
Any help would be greatly appreciated. Thank you kindly.
