My mother and stepfather just cosigned for a mortgage for my brother. My mom said their house is being used as collateral. If my brother can’t pay his mortgage, our mother will have to pay it for him, or the bank will take her house, right?
In a worst-case scenario, your brother defaults and your parents have to find the money to pay the loan or lose their house. Or your brother does not have the money to pay the mortgage, and your parents step in and pay the monthly obligation or your brother agrees to move in with your parents so they can rent the house out. The obligation does not necessarily die with the guarantor; if your parents were to die, it could complicate the probate of their estate.
Your parents have limited options. “At the very least, the lien on your parents’ home should be satisfied once the loan balance is 80% or less of the fair market value of your brother’s home,” he adds. “They should not agree to allow the lien to last until your brother’s loan is paid in full. If your parents want to sell their home for any reason, including to pay for long-term care, they’ll have to pay all or some of the balance of the mortgage in order to release the lien.
It may be time for a family meeting, the kind that should be flagged in advance and not organized in the heat of the moment, and one that should not happen over Thanksgiving.
Loans Loans Latest News, Loans Loans Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: nbcchicago - 🏆 545. / 51 Read more »
Source: FXStreetNews - 🏆 14. / 72 Read more »
Source: CNBC - 🏆 12. / 72 Read more »