Beware Co-Signing A Loan

22 Aug

MetroBoston, Publication Date August 22, 2012
By Attorney George Warshaw

It’s a common occurrence. Your son, daughter, relative or friend is buying a house or condo and can’t qualify for the loan without help.

He or she asks, or you volunteer, to co-sign the loan. After all, you’ve got good credit and good income and you’re happy to help out.  Problem solved.

But is it a good idea?

Not usually.

When you co-sign a loan you sign on not merely to help; you place your income and more importantly your credit on the line. If the borrower fails to make a payment, it shows up on your credit report – and you become responsible for payments.

If you want to refinance your house or get a car loan, it’s a debt that shows up on your credit report. If you have too much credit outstanding, you may get declined for a loan or may have to pay a higher interest rate – just because you helped someone out.

Google the story of Sibylla Nash (“The Mistake that Plunged My Credit Score 200 Points”) who helped a friend. When the friend missed three payments, Ms. Nash’s credit was ruined – and she had to pay her friend’s mortgage!

So think twice (or three times) before you co-sign a loan – and speak with a lawyer before you do. 

More next week © 2012 George Warshaw

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at



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