Homeowners refinancing today are often surprised to hear that they’ve been granted an appraisal waiver – saving them hundreds of dollars.

But what is it, and why are banks offering it?

Being granted an appraisal waiver means that you won’t be required to have an appraiser come into your house to assess it’s worth. If you’d have an appraisal in the past, you know that the appraiser looks into every room, checks light switches, turns on appliances to see that they run, and turns on faucets to check water pressure. He or she checks for cracked windows, loose handrails, peeling paint, and much more.

Then, after taking measurements and drawing your floor plan, the appraiser returns to an office to fill out a comparison form and weigh the various features of your house against others that have sold and closed recently.

This process gives the lender assurance that the house is worth as much or more than they are lending you. It also costs you, as the homeowner, anywhere from $200 to $750, depending upon the size of the house and where you live.

So why would the banks waive that appraisal?

The primary reason right now is COVID-19. They’re doing all they can to reduce human interaction. They hope this will help stop the spread of the virus.

But – doesn’t this increase the bank’s risk?

Possibly, and that’s why appraisal wavers are not offered to everyone. In fact, in most cases they’re only offered to homeowners who are refinancing with no cash out and a history of making payments on time. Home buyers may be offered this option if they have excellent credit, a sizeable bank account, and solid income.

Banks do not go into funding blind. They have their own in-house software that evaluates properties when offering an appraisal waiver.

Borrowers face uncertainty either way. A lender’s “software estimate” may come in higher or lower than the actual value. But – so might an in-person appraisal. If you have been granted an appraisal waver and the estimate comes in low, you always have the option of requesting a traditional appraisal.

Note that not all lenders offer the appraisal waiver option. However, loans backed by Freddie, Fannie, or the VA do, as long as specific guidelines are followed.

If you’d like to know more or learn whether you could refinance with an appraisal waiver, give us a call at Homewood Mortgage, The Mike Clover Group. We’ll be glad to talk with you.

Call us today at 800-223-7409

The pandemic has affected almost every other aspect of our lives. Of course it has affected mortgage lending.

First, the good news: mortgage interest rates are at their lowest levels in decades.

The bad news is that getting a mortgage loan has become more complicated and difficult.

It starts with the fact that the banks are afraid.

So many homeowners have taken forbearance that their cash flow is down. Now they’re worried that some of those homeowners will eventually go into foreclosure. They’re also afraid new borrowers could lose their employment and be forced into forbearance or default.

Forbearance isn’t a gift or a debt forgiveness. The payments will have to be made up at some time in the future. But for the present moment, every payment not coming in affects the bank’s liquidity.

The result of this fear is that banks have tightened their requirements. They want more money down and they require higher credit scores than they did just a few months ago. If your score is 580, you probably won’t get a loan. The minimum for FHA loans appears now to be 620, but some lenders are refusing to lend to anyone with scores under 680 or 700.

You’ll have to prove (repeatedly) that you can pay your mortgage payments.

The traditional “You must have steady income” requirement hasn’t gone away. That means even a loan in progress will come to a halt if you lose your job. Fortunately, due to the nature of unemployment these days, when you go back to work and receive your first paycheck, the loan can go forward.

Prior to the pandemic, lenders verified employment status two or three times before approving a loan. Now they verify as many as ten times – sometimes every 3 days.

The second roadblock is the virus itself.

Due to fear of COVID-19, offices are under-staffed, and some employees are working from home. That makes underwriting more difficult. Regional lock-down orders also make it more difficult to get information from Counties and title companies, and to arrange for a home inspection or an appraisal.

Some lenders are now using drive-by appraisals. That could be fine – or it could be terrible.

You can probably deal with your mortgage lender entirely by phone, email, and internet connections. However, you will probably have to sign the final documents in front of a notary. Due to social distancing requirements, some closings are now being done with masks and gloves – on the hood of a car.

Note that I said “probably.” A new on-line notarization service is gaining ground in some places. It’s a bit complicated, but we’ve heard that it works.

Record low interest rates make this a good time to refinance or take out a home equity loan, but…

Don’t do either without serious thought.

If you’re thinking or refinancing, first consider how long you intend to stay in your home.

Refinancing does cost money, so do the math before you jump. Closing costs will wipe out savings on your monthly payments if you plan to sell within the next couple of years. Do the math and compare your monthly savings with the cost of refinancing. If you’ll recoup the costs within 24 months and you plan to stay put for 5 or 10 years, then yes – go for it!

Taking out a home equity line of credit is a good way to consolidate high-interest debt and reduce your monthly outlay. It’s also a good way to fund needed repairs or remodeling. But do be careful.

If you use the home equity loan to wipe out credit card debt, stop using those cards for anything beyond what you can repay when the statement arrives.

If you use the loan to improve your house, be careful not to over-improve. Unless you plan to remain in your house for the next 20 years, don’t improve beyond the norm for your neighborhood. When it’s time to sell, the “best” house in a neighborhood often sells for less than you’d expect. This is because the neighborhood itself sets the upper limits on a home’s market value.

If you’re ready to purchase, refinance, or take out a home equity line of credit, give us a call at Homewood Mortgage, the Mike Clover Group.

We’ll be glad to discuss your situation, answer your questions, and get you pre-approved for a loan, if you’re ready act.

Call us today at 800-223-7409

Of course. Most people do, at least until they learn the cost.

If you’ve seen the ads for no-fee mortgages, you might think they’re just what you need. And for a few people, they are.

However, nothing is really free.

To begin with, “no-fee” doesn’t mean the borrower only needs to come to closing with the down payment funds. Certain costs, such as those for credit reports, recording, flood service, appraisals, inspections, property tax and insurance reserves, and private mortgage insurance are provided by third-party vendors and are paid separately from the lender’s fees.

Some of these costs, such as insurance and property tax deposits, can be covered by rolling them into the loan balance. But then, or course, the borrower will pay interest on those funds.

Next, there’s the trade-off.

No-fee mortgages almost always carry a higher interest rate than you’d pay if you paid the lender’s regular fees. In the long run, that means your loan will cost more if you opt to pay no fees.

As an example: Closing costs across the U.S. are generally 2% to 5% of the loan amount. Taking the middle road, let’s say 3 ½%. On a $200,000 mortgage, that would come to $7,000.

Interest rates go up and down, but for this example we’ll use 4% with fees and 4.5% with no fees.

At 4%, your payment will be $954.83. Raising that by ½% brings it to $1,013.37, or $58.54 per month. Over the life of a 30-year mortgage, it will cost $21,074 – or $14,074 more.

Since it costs more in the long run, why would anyone want a no-fee mortgage?

Because they are sure they’ll want the loan only for a short time. Using the figures in our example, you’d be saving money if you sold or refinanced in less than 10 years.

If you plan to move in just a year or two, saving the fees is a smart move. It’s similarly wise if you know your income and/or credit rating is going to improve or if you believe interest rates will continue to fall, so you plan to refinance in just a couple of years.

It’s always wise to do the calculations, consider your plans, and weigh the pros and cons before making a major decision.

Here at Homewood Mortgage, the Mike Clover Group, we keep our fees on the low end – at about 2%.

As always, we’ll be glad to go over your options with you and do the math so you can make the right decision for your individual situation.

Call us today at 800-223-7409

While the term “mortgage forbearance” is the one most widely used when speaking of relief from monthly payments, it is NOT what most homeowners want.

Both mortgage forbearance and mortgage deferment allow borrowers to forgo payments for a set length of time, in some cases without incurring late payments.

However, in forbearance, a lump sum will be due at the end of that period. In deferment, the missed payments are either repaid at the end of the loan or via monthly payments.

Some lenders have created special programs specifically to deal with the effects of the Coronavirus pandemic. Others rely on programs that were already in place to assist borrowers dealing with temporary periods of unemployment due to illness, etc.

Neither program offers free money. Neither stops interest from accruing on your unpaid balance. This is simply a temporary pause in payments during difficult times.

Most important for homeowners right now is to call your lender before you miss a payment.

The best course of action is always to make every payment, and to make it on time. However, banks do realize that at this time in history, that may not be possible for everyone. If the pandemic has put you out of work and you don’t have the resources to keep making payments, contact your lender right away.

Discuss the options available to you, and make sure you understand the terms and conditions.

Even some lenders use the terms interchangeably, and it’s up to you to make sure you’re agreeing to a plan that will benefit you – not put you in an impossible situation a few months from now.

Different lenders are approaching this situation in different ways, so don’t assume that your lender will be in step with an article you read or news you heard.

Some will allow loan modifications. Some will allow your monthly payment to be changed later on, after the crisis is over and you’re back at work.

When you call your lender, ask:

• Are there a variety of options are available? If so, what are they?
• How long will the deferment period last?
• How will I be required to repay the missed payments?
• Will the program carry fees?
• Will I need to make payments to escrow for taxes, homeowner’s insurance, and mortgage insurance during that period?

The worst thing you can do is nothing.

Ignoring the problem and hoping that perhaps you can get caught up by next month is not the way to proceed.

Even if you can catch up, that one missed payment will result in late charges and a blot on your credit report. Right now, when you may need to borrow money for necessities, is not the time to lower your credit scores with missed payments.

A deferment will show on your credit report, but it is neither a positive nor a negative. A missed payment is a definite negative, and if it turns into 2 or 3 missed payments, it gets worse.

Remember – before you sign anything, read it carefully.

Be certain that you understand the terms and conditions before you agree to any course of action.

A refinance could be a solution…

If your household income has been reduced, but not eliminated, a refinance into a lower interest rate/ payment might be the most sensible option for you.

We at Homewood Mortgage, the Mike Clover Group will be glad to talk with you and outline available options.

Call us today at 800-223-7409

Mike Clover
Homewood Mortgage,LLC
Mortgage Banker
1-800-223-7409
NMLS# 234770
18170 Dallas Pkwy
Ste. 304
Dallas, TX 75287

You probably know that mortgage rates have been falling. Economists are predicting that they may fall even more, should the yield on the 10-year Treasury continue to decline.

We thought rates were at a historic low some years ago – but now with rates hovering at around 3%, they may amount to a once-in-a-lifetime refinancing (or purchasing) opportunity.

But does it make sense for you?

The answer lies in your own personal situation.

The factors to consider are:

• Your current interest rate.
• Your current credit rating.
• The amount of equity you have in your home.
• The type of loan you have now.
• How long you plan to stay in your current home.
• The cot of refinancing.

If you’re still paying a relatively “high” interest rate, then you should look seriously at what you might save. The difference between 5% and 3% on a $250,000 loan balance amounts to $288 per month. The difference between 3% and 4% is about $139.

Look at your current credit rating to see if you qualify for the low, low rates you’ll see advertised. Remember that those are for the “safest” borrowers – those with excellent credit.

How much equity do you have in your home? If you have 20% or more, you’re in good shape. If not, the only loan you’d be offered would carry mortgage insurance, which might cost more than you’d save.

Are you in a fixed-rate mortgage or an adjustable-rate mortgage? Since the world is in turmoil at present, rates could turn and go the other way in a few months. If your loan is adjustable, it might be wise to refinance into a fixed rate mortgage loan.

How long do you plan to stay in your home? If you want to sell within the next year or two, you probably won’t realize enough savings to make a refinance worthwhile. If you plan to stay for 5 years or more, it’s something you should consider.

What does it cost to refinance? Depending upon the lender and the program, it costs up to 4% of the loan amount. Here at Homewood Mortgage, the fee is about 2% – or $5,000 on a $250,000 loan.

To use that number as an example – if refinancing would reduce your payment by at least $208.33 per month, it would be worth considering, because you’d get that investment back in 2 years. If the reduction would be more than that, and if you’re planning to stay in your home, then you’d be wise to get started on a refinance.

The first step toward a good decision is knowing the facts, and we at Homewood Mortgage, the Mike Clover Group, will be glad to provide those facts. Give us a call to learn how much you could save by refinancing this Spring.

Call us today at 800-223-7409

When many of us think about capital gains we think of investors, but you as a homeowner could also be subject to capital gains tax.

It comes into play when you sell your home (or other assets) at a profit.

There are two types of capital gains tax – short term and long term.

Short term capital gains apply if you’ve owned the asset for one year or less.  This tax is based on your tax rate for that year. The profit will be added to your ordinary income and you’ll pay tax on the gain no matter how much you earned.

Long term capital gains rates are based on your income, but you’re your tax rate. They apply if you’ve owned the asset for more than one year. According to Bankrate.com, The long-term capital gains rates for real estate are as follows:

Texas does not impose additional capital gains tax, although many other states do.

The primary residence tax exemption may erase your capital gains liability.

If you meet certain requirements, you and your spouse are each entitled to deduct $250,000 from the profit on your sale. Thus, if you paid $200,000 for your home many years ago and now sell it for $700,000 you will owe no tax.

The requirements are:

• You must have owned the home for at least two years.
• It must be your primary residence – not your summer cabin or winter retreat.
• You must have lived in it for at least two of the past five years.
• You must not have taken this exclusion on another house within the past two years.

There are exceptions if, for instance, your job forces you to move in less than 2 years. See IRS Publication 523 and consult your tax advisor.

Remember that capital gains tax is imposed only on your profit, so keep track of home improvements.

If you’ve replaced your roof, built a deck, replaced windows and doors, or finished the basement, all of those costs add to the cost – or “basis” – of your home.

Make sure to keep receipts and records of all such improvements – just in case your home appreciates beyond the primary residence exemption. Do keep in mind that ordinary repairs and maintenance don’t count.

You may owe very little if you sell an inherited house.

The good news about paying taxes on the sale of an inherited home is that the basis is “stepped up.” The original price of the home becomes irrelevant, and the value is set as of the day the owner passed away.

This is extremely beneficial to heirs whose parents paid $25,000 for a home back in the 60’s, and it is now worth half a million or more.

Is there a way for Texas real estate investors to avoid capital gains tax?

Yes, but it does require following specific steps. The solution is to swap like-kind properties through the use of a 1031 exchange. Such an exchange has strict rules regarding timelines and guidelines. Before attempting this, consult with an account and a real estate attorney. Then work with a real estate professional who is up-to-date on the rules regarding a 1031 exchange.

Here at Homewood Mortgage, the Mike Clover Group, we’re always happy to help our clients look at ways to benefit financially. If you have questions or want to know your options, just give us a call.

Call us today at 800-223-7409

Does home ownership still offer tax benefits? Yes, depending upon several factors:

The benefits aren’t as pronounced, however, since the Tax Cuts and Jobs Act went into effect on Jan. 1, 2018. This raised the standard deduction to $24,400 for married couples, so only about 5% of taxpayers now itemize.

It could still be in your best interests to itemize, especially if you have a recent mortgage, so the bulk of your monthly payment is going to interest.

Here’s what’s deductible under itemization:

Interest: Under the new rules, you’re entitled to deduct interest on loans up to $1 million if the mortgage went into effect before December 15, 2017. If your mortgage is dated December 16, 2017 or later, you can deduct interest on up to $750,000. This calculation will give your tax preparer a bit of extra work to do.

Still staying within the $1 million and $750,000 limits, you can also deduct the interest on Home Equity Lines of Credit – as long as the money was used to purchase or improve your house. If you used the money to finance a vacation, a wedding, or a new car, the interest is NOT deductible.

Property taxes: The deduction for property taxes is capped at $10,000 for those filing jointly, no matter how much you pay in taxes. Added to your mortgage interest and line of credit interest, this could bring you above the standard deduction, so be worthwhile to note.

Remember that if you have a mortgage, property taxes are built into the payment. Check your year end statement to see how much you’ve paid.

Private Mortgage Insurance: If you paid less than 20% down on your home, you’re no doubt paying for private mortgage insurance. This costs from 0.3% to 1.15%, depending upon the details of your loan. Again, check your end-of-year statement to see how much you paid in 2019.

Adding this to interest and property tax figures could make itemizing worthwhile.

Home Improvements to Age in Place: These can be deducted as part of your medical expense deduction, which must exceed 7.5% of your income and adds to your total itemized expenses on Schedule A.

These expenses must be deemed necessary by a doctor, and can include items such as entry ramps, grab bars, widening doors for wheelchair accessibility, installing railings, support bars, or other modifications to bathrooms, lowering or modifying kitchen cabinets and equipment, moving electrical outlets, and much more.

Credits and other deductions

Some energy efficiency upgrades are still a tax benefit.

Since these are credits, they’re worth more to your bottom line than a deduction, so be sure to claim them!

While most energy efficiency credits expired after 2016, you can still get tax credits for solar electric and solar water heating equipment. If you installed your equipment between January 1, 2017 and December 31, 2019, your credit will be 30% of the expenditure. This drops to 26% for 2020 installation and to 22% if you wait until 2021.

You can also take a credit for up to 10% of the cost of other energy efficient upgrades, such as doors and windows. There’s a lifetime cp of $500 on this, but if you’ve made the upgrades, you might as well take the available credits.

Home Office Deduction:

This is a deduction, but is reported on Schedule C, because it is a business expense. If your home office is your primary place of business, you’re entitled to deduct $5 per square foot, up to 300 square feet, for a total deduction of $1,500 per year.

Note that you may not take this deduction if you have another office and only work from home occasionally.

The bottom line: Owning a home is still a financially sound decision.

You may or may not save on taxes, due to the increased standard deduction. But you will build equity as each year goes by. And, when you obtain a fixed-rate mortgage, you will have the security of knowing that the only increase to your monthly payments will come from property taxes and insurance.

On the other hand, rent payments are likely to keep increasing.

If you’d like to explore the difference between continuing to rent and owning your own home, call us here at Homewood Mortgage, the Mike Clover Group.

We’ll be glad to get you pre-qualified for a loan, show you how much you can pay for a new home based on your current rent payments, and give you facts and figures with which to make a sound decision about your future.

Call us today at 800-223-7409

Money guru Dave Ramsey has a lot to say about buying houses, and one of the things he’s most adamant about is choosing a 15-year mortgage rather than a 30-year mortgage.

He also says that you should wait to buy until you can put 20% down and avoid private mortgage insurance, and to temper your choice so the payment on your mortgage is no more than 25% of your monthly take-home pay.

Dave says that if you can’t afford the payment on a 15 year mortgage, you either aren’t ready for home ownership, or you need to scale down your wants in order to buy a home you can afford.

Why does Dave recommend a 15-year mortgage?

The first reason is obvious. If you stay in your home until it’s paid off, you’ll own your home in 15 years rather than 30.

The second reason is that you’ll spend thousands less to achieve that ownership.

Let’s look at the difference in what you’ll spend to own that house.

Say you’ve chosen a house that costs $250,000 and you’re able to put 20% down. Your new mortgage will be for $200,000.

Let’s say you’ll pay 3.77% on a 30-year mortgage. The payment for principal and interest will be $928.50. Because banks charge a lower interest rate on 15-year mortgages, that interest rate would likely be 3.23%. Your monthly payment would be $1,403.39, or $474.89 more.

That seems like a lot, coming out of your monthly income, but if you can afford it, it’s worth it for the long term.

• With the 30-year mortgage, you’ll pay a total of $334,260.
• With the 15-year mortgage, you’ll pay a total of $252,610.20

That’s a difference of $81,649.80.

I won’t be there that long, so what does it matter?

It’s true that in today’s mobile society, most people don’t stay in the same home long enough to pay it off. Some reports say the average American moves every 5 years.

So doesn’t it make good sense to keep all the money I can in my pocket?

No, not really. Think about equity.

After 5 years on a 15-year loan, you’ll have paid in $84,203.40 and will still owe $143,752. You’ll have gained $56,248 in equity.

After 5 years on a 30-year loan, you’ll have paid in $55,710. And will still owe $180,214. You’ll have gained only $19,786 in equity.

With the 15-year loan, you’ll have paid in $28,493 more in payments and will have gained $36,462 more in equity.

See how the difference would affect you…

If you’d like to explore the difference between a 15-year and a 30-year mortgage on your new home purchase, call us here at Homewood Mortgage, the Mike Clover Group.

We’ll be glad to get you pre-qualified for a loan, help you decide how much you should pay for a new home, show you the current rates, and give you facts and figures with which to make a sound decision about your mortgage.

Call us today at 800-223-7409

When you obtained your mortgage loan you may have been given a choice between a 30-year payoff and a 15-year payoff. Perhaps you could have afforded the payments on a 15-year note, but wanted the security of the lower payment – just in case.

That doesn’t mean you can’t pay off your loan in 15 years – or even sooner. When you send that monthly payment, you can increase it to any dollar amount you wish.

Is it a good idea?

The answer all depends upon your bank account and cash flow, plus investment opportunities available to you.

For instance: If paying down your mortgage means carrying a balance on credit cards, then no. It’s not. You’d be far better off paying off the credit cards in full each month.

Get rid of high interest debt first, then consider your next move.

It’s also a good idea to keep some cash on hand for emergencies and opportunities. If paying down the mortgage means an empty savings account, you’d be wise to wait a bit.

Paying your mortgage loan off early is like earning interest on an investment.

Does that sound strange? Look at it from the other direction: If your mortgage loan is at 4% and you pay an extra $500 per month to pay it down, it’s the same as making a $500 investment that yields 4%. That’s because every dollar of principal that’s paid off will never accrue more interest. (Apply the same thinking to credit cards and see why it’s wise to pay them off.)

If you’re in a position to earn a higher rate on investments, then paying down the mortgage is not wise.

If paying down your mortgage “earns” you 4% but you can invest the same dollars elsewhere to earn 6, 8, or 10%, then you should invest for the highest rate of return.

The most powerful way to benefit from early paydown…

Keep making the payments once your mortgage is paid off – but now put them into a retirement account.

Look at the difference in outcomes…

Say you have a new 30-year loan for $300,000 at 4%, with a principal and interest payment of $1,432.25.

If you make the required monthly payment, at the end of 360 months you’ll own your home.

Assume for a minute that you have an extra $567.75 per month, so you put it in a savings account. At the end of 30 years (360 months) you’ll have put away $204,390 plus interest.

$2,000 per month invested over 12 years would put $288,000 plus interest in your retirement account. Either way you’ll own your home and will have spent the same $2,000 per month. But by paying down the mortgage, you’ll have an extra $83,000+ (plus interest) in your retirement account.

Now let’s assume that you can more than double that payment, bringing it to $3,000 per month. The loan will pay off in 122 months – 18 years and 10 months early.

Are there other reasons NOT to pay a mortgage loan down early?

Possibly. One objection is that because your monthly interest charges will go down rapidly, you’ll lose tax deductions. This may not matter now, because since 2018 there are stricter limitations on home mortgage deductions. In addition, with the increased standard deduction, you may not even choose to itemize in the future.

What about the impact of inflation or deflation?

We have no crystal ball, so have no way to foresee whether we’ll soon see a period of raging inflation. If that happens, then it would be wise to discontinue paying down the mortgage, because you can pay it later with cheaper, inflated dollars. The opposite would be true if we enter a period of deflation.

Mortgage software makes it easy to see the impact that different payment amounts will make on your future finances.

If you’re interested, sit down with your lender and explore different options. Remember also that once the bank has committed to a fixed 30-year loan, that’s only the minimum that you’re locked into. You can add dollars or even double payments any time you have extra funds. That might be a good use for your income tax refund, a year-end bonus, or the windfall from a particularly good commission sale.

Here at Homewood Mortgage, the Mike Clover Group, we’re always happy to help our clients look at ways to benefit financially. If you have questions or want to know your options, just give us a call.

Call us today at 800-223-7409

Here’s what you need to know before you decide to add your name to that dotted line.

First, what does co-signing really mean?

At the bottom line, it means you are accepting full responsibility for making the loan payments.  You are adding the security of your income and credit history to the transaction, along with the “occupying borrower.”

When you agree to co-sign, your income, credit history, assets, and debts will be scrutinized by the lender, just as if you were the primary borrower. They’re attempting to verify that you have the ability to take over making payments if the primary borrower defaults.

Note that your high credit scores won’t guarantee loan acceptance if the person you are attempting to help has low scores. Credit scores are, after all, a reflection of a person’s track record of handling credit.

Co-signing can reduce your own ability to obtain a loan.

Remember that when you co-sign a note, that debt is added to your own debt with regard to your debt-to-income ratios. That means that while you might show the ability to make new mortgage payments of your own if only your own personal debt was considered, your lender has to assume that you are already making the payments on the note you co-signed.

Co-signing is risky.

If something happens to affect the primary borrower’s financial health, you must either take over making the payments or see your own credit destroyed. Even if the borrower misses just one payment, then catches up and resumes making on-time payments, your credit score will be affected. According to FICO, someone with a score of 780 or more would see a crop of 90 to 100 points in response to a missed payment. Late payments have a similar effect.

In a survey done in 2016, 38% of co-signers reported having to pay mortgage loan or credit card bills, while 28% reported suffering a reduction in credit scores because the primary borrower paid late or not at all. 26% said co-signing resulted in a damaged relationship with their friend or family member.

How can you protect yourself?

You love the person who asked you to co-sign. You want to help, but can you trust that person to meet their obligations? Past behavior is a good indicator of future performance, so first have a look at his or her credit report.

If there are late payments or defaults, is there a very good reason why? If they truly can’t handle money, you won’t be doing them any favors by helping them get further in debt.

If the problem is lack of income, can you see that their income is likely to rise immediately, or will the be stretching themselves too thin? Again, you might do them a favor by saying no.

If you decide to go ahead…

Make sure that you will be shown as a co-owner as well as a co-borrower. This will give you a measure of control, should it be necessary to sell the property.

Next, set up email or text alerts to tell you when payments are due and when they’ve been made. Since mortgage payments generally have a 15-day grace period for payment, this gives you the opportunity to step in and make the payments before a late charge is incurred and the late payment is added to your credit report.

Make sure the person for whom you’re co-signing knows how to reach you and knows that they MUST contact you immediately if it appears that they won’t be able to make a payment on time.

Do you have more questions? Call Homewood Mortgage, the Mike Clover Group. We’ll be glad to provide the answers.

Call us today at 800-223-7409