Cosigning your in-law’s refinanced mortgage can often be a big mistake, especially if they don’t have much financial stability.
Q: I was wondering what legal action could be taken if the person living in the home is on the home title but not on the mortgage loan? I recently helped my mother in law refinance to bring her monthly mortgage payment down and due to recent events I now fear she’ll either be late on payments or skip payments entirely.
A: We’ve written frequently about this issue in the past and we always tell our readers to be extremely careful before deciding to co-sign a loan for a friend or a family member.
When you co-sign a loan, you are taking on all of the responsibilities for making all of the payments on the loan, not on a proportionate share based on your ownership share.
You are right, by the way. If your mother in law fails to make a payment or pays late, you are legally responsible for making the entire payment, your credit and your mother in law’s credit will suffer.
Now that you’ve signed, it sounds like you have some regrets about co-signing. Unfortunately, the only way you can now get out from under the loan is to have your mother in law refinance the loan again and only have her sign the loan documents. She would then be the only borrower, and you would no longer be on the loan.
But it sounds like she’s having serious financial difficulties, which will likely make it difficult, if not impossible, for her to refinance. We assume, however, that you are a part owner of the home. Another way to get out from under the home is to sell the home and pay off the debt. Your mother in law could then rent a home and not have the burdens of paying the mortgage, real estate taxes, insurance and upkeep on the property.
If you’re trying to help your mother in law make her payments on time, she could consider renting a room out to a tenant or finding another job or source or income to help bring in more cash. You could also have your mother in law pay you the monthly mortgage payment each month and you would make the payment on time. That way you’d know that her bills are being paid on time and your own credit won’t be threatened.
Unfortunately, this situation could lead to your mother in law stopping her payments and you being left on the hook. But again, at least in this unfortunate scenario, you’d have control over when bills get paid.
These are the most common solutions to your situation, and you’d have to consult an attorney on any legal actions that might be available to you. Good luck.