Do not co-sign house and car loans
In my 35 years of law practice, I have learned from listening to clients to never co-sign for someone's car or house loan. If they default, it hurts your credit. It will also affect your ability to get your own loan if you need to.
Curtis: Longtime listener, how are you doing, Tom?
Attorney Tom Olsen: Thank you, go ahead.
Curtis: I got a question about co-signing on a loan for a home.
Attorney Tom Olsen: All right, don't do it. Go ahead.
Curtis: Don't do it?
Attorney Tom Olsen: Yes.
Curtis: Anyway, I'm going to co-sign a loan with a friend, then after the closing clause and everything, it's about three or four months, they take my name. Can I take my name off the loan?
Attorney Tom Olsen: Absolutely, positively not. No, Curtis, your name will be on that loan until the day it's paid off whether that's five years or 30 years from now. If your friend ever makes a late payment, it's going to show up on your credit report. If he ever quits making payments at all, then they're going to do a mortgage foreclosure and that's really going to ding your credit. Curtis, that's why I started off this conversation by telling you, "Don't do it." Now, Curtis, if you're going to ignore my advice and going to do it anyway, Curtis, I'm going to say this, Curtis, make sure at least then your name is on the deed to the property as well.
If you're going to take this risk, you might as well have your name on the deed as well. If you don't do anything, they're just going to put your name on the mortgage and not own the deed to the property. Curtis, does that make sense to you?
Curtis: Yes, it does.
Attorney Tom Olsen: Have I told you--
Curtis: Without my name on the deed on the property, if the other person doesn't pay, then they own the condo but I just own the mortgage, then?
Attorney Tom Olsen: You got it, Curtis. Curtis, have I turned your head around? You going to not do this loan, now?
Curtis: Well, I'll have to talk with her. Anyway, about--
Attorney Tom Olsen: Is she your girlfriend, Curtis?
Curtis: No, she's a friend, a close friend, family like.
Attorney Tom Olsen: Look, Curtis, I've been a lawyer for 35 years. For 35 years I've been telling people, "Do not co-sign mortgages and do not co-sign car loans." Even if it's your kids, don't do it, Curtis. That's my recommendation to you. If you're going to do it, Curtis, at least put your name on the deed as well. Good luck to you, Curtis. Bye-bye.