Why You Should Never Co-Sign On A Loan
Often we have several clients that ask us about what happens if they co-signed for a loan for someone. My advice is almost always "DON'T DO IT!. As you can tell I am not a big advocate of co-signing on a loan, especially a mortgage. You may think you're doing a good deed by adding your name to a loan but, you could be headed for big financial trouble. What could be worse than being head over heels in debt with little hope of climbing out? Try this: Your child (parent, significant other) is head over heels in debt and your just as responsible because your name is on the loan.
It happens all the time. I remember
meeting a 41-year-old photographer who had recently divorced and inherited $21,000 of his ex-wife's debt. Another situation we have encountered was a buyer who thought he was involved in a great relationship started picking up the tab for his soon-to-be ex-partner. We have recently also talked to a parent who co-signed for a credit card for her college-age daughter and is now stuck with $30,000 in credit-card debt.