To sign or to co-sign?

[Guest Low Roller]

My fiancee and I just got our offer accepted on a house, and the next thing we need to do is set up a mortgage. We can both afford the mortgage on our own, however we are also wondering whether we should co-sign on it...

Are there any income tax benefits one way or the other? Any other benefits?

[Kanada Kev]

Congrats on getting an offer accepted. That's a big win

Sorry, i don't know about the tax benefits of co-signing vs. going solo. Maybe if there's some massive difference in incomes, or one person works out of the home and you can then write off more expenses (since it's based on a percentage of use) maybe? Every time we've done one we've co-signed.

[Booche]

Wait wait wait wait wait. You need to think this through my friend.

Whatthefuck are you getting married for if you can afford this mortgage on your own?

[Guest Low Roller]

The steady sex?

[Kanada Kev]

Edited April 27, 2010 by Guest

[Booche]

The steady sex?

Didnt you just admit you can afford the mortgage on your own?

[Hal Johnson]

While I don't know anything about any tax benefits, there are probably more benefits to co-signing than there are to going solo. The biggest thing is that refinancing is much easier to do if you have both names on the loan. Adding a name later can be a pain in the butt, especially if your pressed for time (like if your moving and you want to upgrade your house, but need your fiance's income to get approved). Also, though its not commonly regarded as a big thing, having both names makes it a lot easier to maintain the loans. I would get into soooooo many arguments with people whose names weren't on their mortgaeg but still wanted to make changes to it. I don't know, hope it helps man.

[Booche]

All joking aside, I would co-sign simply to improve each of your credit ratings unless you are both at the top but at your age I am going to doubt it. You guys might want to buy additional properties in the future.

But I have no idea how this can help regarding taxes or anything else.

[Guest Low Roller]

From what I can gather the only real benefit to co-signing is that you're more likely to get a loan and also you can get a higher loan.

The HBTC (home buyer's tax credit) is applicable for first time home buyers, however it is not additive, so if we were to co-sign on the mortgage then we would both only be able to get a single tax credit on the first house, and none on the subsequent. In essence losing a tax credit.

[Guest Low Roller]

I read that co-signing can actually negatively impact your credit rating, because all it's saying is that you can't afford a loan on your own and that you're also a higher risk because you depend on the other co-signer to meet their end of the deal.

If the co-signer can show a reliable record of paying their share it will have a positive impact on your credit rating.

[Booche]

I suppose that is entirely possible.

I am only going by my singular experience. I had a shitcredit rating when we signed (my past wookie life caught up to me once again) but learned that it was going to improve by making mortgage payments and blah blah blah.

[larry_llama]

just ran into an issue where a friend and i were buying a rental property and we had trouble because we each already have a house with our significant others - but the bank viewed each of our home mortgage payments (and taxes) as our own debt liability.

so on paper, it was 2 people with 2 incomes buying a 3rd house when we already were collectively responsible for 2 houses - whjich put us over the legal ratio.

our respective better halves incomes did not come into play since they were not listed on the new mtg.

so there is another way co signing can hurt you - if you ever think you might want an income property it will be much easier if you don't already have a personal mortgage responsibility.

edit to add - we were putting 20% down and we still didn't qualify - we basically had to prove rental income to put us over the edge.

Edited April 27, 2010 by Guest

[Guest Low Roller]

Excellent point. Thanks LL.

[phishtaper]

congrats. whats the house like?

[skelter]

You really should get advice from your mortgage broker, accountant, and/or financial planner. Hippies give bad advice.

[bouche]

I say you both sign it. Just get the damn house.

The benefit will be that YOU OWN A HOUSE.

[Hal Johnson]

Hey, some of these hippies worked for a mortgage company for a couple of years...whose job it was to give advice...LR, like Bouche said, you want your name on there, and likewise, so does your fiance. The benefits far outweigh the liabilities.

Edited April 27, 2010 by Guest

[Booche]

1 - Get your name on the mortgage, ensure only yours appears.

2 - Make her sign a pre-nup.

[Davey Boy 2.0]

...and don't forget the "steady sex" clause in the pre-nup

[jaybone]

3- Profit!!!

[questcequecest?]

You could go to the source: CRA

You will qualify for the HBTC if:

* you or your spouse or common-law partner acquired a qualifying home; and

* you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

It makes no difference if one or both of you sign the mortgage. You can not *save* a credit for the 'other person's first home'.

Congrats on the house!