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Roger.G
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0.10 Dollars($)
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 Posted: Tue Mar 13, 2007 5:54 am Post subject: Can parents create revocable trust instead of me cosigning? |
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My parents are in their 60s and are planning to buy a home in Arizona. They will be using it as their principal residence. They want that I cosign the mortgage they will take out so that if anything happens to them, I shall be their heir. Can they instead create a revocable living trust instead of reducing my chances of buying home in a few years' time. What are my tax ramifications here and the debt risks and rights on the property. Both my parents have good credit.
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balent
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0.10 Dollars($)
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| Posted: Tue Mar 13, 2007 11:58 am Post subject: |
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| If credit score of your parents is good then you need not be made co-signer for the mortgage. Creating a revocable living trust will be a better option to select. |
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Robby Krieger
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0.10 Dollars($)
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| Posted: Tue Mar 13, 2007 2:49 pm Post subject: |
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| Quote: | | They want that I cosign the mortgage they will take out so that if anything happens to them, I shall be their heir. |
Being a co-signer can certainly help to qualify if your credit score is good but the next time you were to purchase another home the rates you get would be relatively higher as you are already liable for a mortgage. |
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Weider
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| Posted: Tue Mar 13, 2007 4:09 pm Post subject: |
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If your parents create a revocable living trust then in the trust document they will state how the property will get divided in a situation something happens to them. You will get rights over the property after their demise.
On the other hand to become a co-signer along with your parents you will be required to have ownership rights on the house. Rates you can expect when buying a new home might be higher as you would be already having a mortgage obligation. |
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 Caron
Moderator
Joined: 19 Jul 2005
Posts: 1482
Location: florida
250.38 Dollars($)
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| Posted: Wed Mar 14, 2007 5:07 am Post subject: RE: cosign on loan vs create living trust |
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Hi Roger,
If your parents have good credit, then it is better that you do not cosign on the loan. Being a cosigner, your chances of getting a home loan in future will be reduced. This is because the loan payments should be made in time and in case there is a default, it will be your responsibility to pay it off. This is why the lender or the mortgage company you will deal with may consider offering the loan as a risk.
I shall suggest that your parents hold title to the Arizona property in their revocable living trust. They can name you are the successor trustee and the final beneficiary. It will then be easier for you to avoid probate and get the property-title after your parents' death.
Thanks,
Caron. |
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