Loan modification: When is the earliest we can have a co-signer removed from a mortgage loan?

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My husband and I are asking my dad to co-sign for a mortgage, mainly to increase the amount we can get. My father is concerned about being responsible for the duration of the loan given his age (75) and if anything were to happen, his wife would then be responsible. Can we have him co-sign, and then after a period of time, have a loan modification w/the bank to remove his as a co-signer? If so, what is the earliest amount of time that can be requested?

  1. Reply
    ibu guru
    April 29, 2011 at 9:31 pm

    No way! The only way to get a cosigner off a mortgage is to repay the mortgage in FULL. No mortgage can be “modified” to remove a borrower, co-signer or guarantor. If your co-signer dies or becomes disabled, they can call the mortgage, and you would either have to pay it off in full immediately or lose your house.

    If you and hubby cannot get a mortgage on your own income, assets, and credit, do NOT buy a house now. Property prices are dropping again, and are expected to drop at least another 20%. You clearly are trying to get more credit than you’re worth, and that’s going to be a total disaster within a few months when you are underwater on your mortgage. You cannot afford the house you’re thinking of buying! And it is going to be less affordable by the end of this year.

    You either stick to a mortgage within your credit and income limits (bad idea), or wait and save up a lot more down payment. Criminy, if you save up 20-25% of the price of the house you want now, in 2 years you probably will be able to buy a whole house for that and never have to deal with a mortgage!

    Wise up. You are committing financial suicide, and taking your father with you, if you proceed as you propose.

  2. Reply
    DON W
    April 29, 2011 at 10:30 pm

    You’d have to refinance the mortgage to get his name off.

    One thing I believe you have wrong, though–if he personally signs, I do not believe his wife would personally be responsible should he die. A mortgage broker would know for sure.

  3. Reply
    April 29, 2011 at 11:17 pm

    The day your REFINANCE in your name alone. Loan modification refers to changing the REPAYMENT terms. The ONLY way to remove a person from liability is to PAY OFF the loan. This normally requires a NEW loan.

    Note: His wife CANNOT inherit his liability. If he dies, he is no longer liable.

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