Most parents work hard to protect and help their children as they grow, and continue to do so when their children become adults. One aspect of helping is often assisting their children in buying a home, often through co-signing a mortgage.
Acting as a co-signer or guarantor on a mortgage may seem like a simple thing to do. You have equity in your home and likely a much longer work record; your child has saved a down payment but is having trouble getting approved on his or her own. What you need to be comfortable with, however, is that, by signing, you become equally responsible for the mortgage. If your child stops paying the mortgage for any reason, the bank will go after you. In my experience, it is far more acrimonious when there is a fight between parents and children than between strangers.
It’s great to be able to help your child make such a major purchase. Before you do, you always want to be comfortable with your child’s financial status. A lack of employment history is easily dealt with; poor money management is a bigger problem. Be sure your child truly is ready to buy a home.
