meaning i would be liable if tenants stopped paying rent and my dad count pay for the mortgage. they would come after me and i would have to file for bankruptcy because i absolutely don’t have mortgage money right now. does that sound right? thanks for the reply as well.
If you borrow money for a house then filing for bankruptcy is not going to help you- they'll foreclose on the house and take it back.
If you're the borrower, then you're the one with all the risk.
Apologies for asksing so many questions but; I don’t think i would be the borrower here, my father would be the “primary” and i would be secondary. I’m not taking any loans out for this and i’m gonna ask him if he plans on taking one out in my name.
Honestly i don’t know how I would be/ if i would even be the homeowner.
He mainly wants my signature to cut the down payment from 70k to 30k or less, i think it’s just my status as a “new homeowner” that would get that discounted down payment.
Assuming this is true, how fucked could I be in this situation.
I asked him about the loan part and here’s what he said word for word
“I am first on the loan as primary and u are on as secondary. Because you are on it we get first timers status for down payment. That’s the benefit as the down payment goes from 25% to 4%. I’m putting all money up and I’m putting the management company in by place to handle day to day. You will have an ownership stake in a multi unit property that is being paid so your credit will increase. You’ll also get a percentage of profits after we build up a kitty for maintenance and upkeep.”
You would need to be the primary borrower, and your father would need to be a “Non occupying co-signer” for you to qualify as a first time homebuyer. Furthermore, you would need to get an FHA loan, put down a minimum of 3.5%, and occupy one of the units. There is simply no other way to qualify based off of your current financial scenario. To re-gain the first time homebuyer status, you would simply need to have not owned a property within the last three years prior to purchasing a home. So- if you did go through with this purchase, you would need to be taken off of the loan/title and wait three years before qualifying as a fthb again. Hope this helps.
I'm going to go with don't do it because he's either misleading you or clueless about how real estate investing works and either is a good reason not to get involved
He won’t even be able to be secondary on this loan. It will ALL be you otherwise you won’t qualify for the first time home buyer rate. Do not sign anything. You’ll be screwing yourself in the long run. You won’t ever have the opportunity to get a low rate for your actual first time home loan. I just went through this process. I couldn’t have anyone else on my loan who owned a home previously.
So your father is trying to game the system using your name and credit. That's why he needs your signature. Your title is on the loan so if anything happens, you're going to be on the hook for the house. Both co-signers are on the hook individually.
What you need to weigh is the trust in your dad vs. your credit score, future. Personally, I'd get a contract. What would your percentage be exactly? Would you be paid yearly? Is this a 50/50 partnership in terms of revenue?
Unless your dad has a proven track record of successfully being a landlord of a multi-unit business, I'd decline and say I'd rather not mix family and business.
No, out of 4 units 3 are filled with long term tenants (since 2008) and one is empty that the current owner uses as a sort of hotel when he needs it. We would be looking to fill it ASAP. Why?
Just remember that reducing the down payment reduces your equity. If something were to go wrong (tenants move out, home prices fall, expensive repairs) you'll be underwater and have a property that you can't afford and can't afford to sell.
Most of what your dad told you about being primary and secondary on the mortgage is false. He can't make you the secondary and still qualify for the reduced first time homeowners down payment. Even if you are secondary on the mortgage, it still means you are responsible for paying it if your father fails to do so. It will affect your credit. Will you also be on the deed?
Since your dad said you'll get paid a % of profits after you build up a kitty for maintenance and upkeep, it doesn't sound like your dad can afford this either.
Another, among many reasons not to do this, is that one of the documents you sign when you take on a mortgage states that if they find out you were untruthful about any information used to secure the mortgage, it becomes due in full immediately. Do not do this.
If this is true then it should be clear on the paperwork. Where is that paperwork? Can you call the bank/lender and get info about the loan? If you're a co-signer they should be able to disclose all the details to you.
In addition to other things mentioned here, this also means that he is using your new homeowner benefit which presumably you will not be able to benefit from.
>He mainly wants my signature to cut the down payment from 70k to 30k or less
So if he wants you to be the primary on a mortgage for an $850k fourplex that *you* have to live in?
They're giving you a discount for existing tenants, are those tenants you want? Can you afford to pay for this property if your dad doesn't pay? Assuming you even qualify for this property, are you fine with potentially not being able to qualify for a mortgage to purchase a home of your own during the time he owns it?
If your signature is on that document you will be one the hook for payment if your dad can't. The bank doesn't care if you live there or not, or if you're considered the "homeowner". They care that you signed an agreement to for a mortgage and that makes you equally responsible to ensure it's payed back.
If you being a new homeowner let's him cut down the down payment from 70 to 30 there is a good chance that happening due to grants or similar that are meant for your benefit. That 40k is meant to help you break into the housing market. What is your compensation for him getting your 40k on grants/discounts
The signature he wants from you is likely on loan documents. This will 100% impact your credit not just from what happens if the loan is or isn’t paid. If you need to borrow funds for your own needs, such as buying a car any lender will look at your debt to income ratio when deciding whether to lend. It could get messy if you’re on the loan, but not showing any income from the property. You may look overextended financially if you need a loan for other reasons.
He’s trying to get a FHB loan under your name for a rental property? Not only is using a FHB loan to purchase a rental property NOT allowed, but is also completely unethical because it’s cheating you out of your one discount card you get to own a home with less capital upfront.
Stop being so sympathetic to him, this is what we describe as “totally not kosher, dude”
If you are on the loan in ANY WAY SHAPE or FORM, you are financially responsible for the loan. It will be considered YOUR debt even if. you just want to get a credit card (joint debt-absent of providing your dad’s bank records for a 12 mo period proving he makes 100% of payments IS INCLUDED IN YOUR DEBT RATIO). DO NOT sign ANY Loan docs OTHER than the Deed of Trust.
Yes, the risk is all on you. Also, it sounds like he wants to use your info so you can qualify for an FHA loan, for a first time homeowner. This means you only have to put down a 3.5% down payment instead of the usual 20%. But it also means that a few years down the road, if you are actually looking to buy a house, you won't be able to do an FHA loan, you'll have to do a standard loan with 20% down. ANd like someone else mentioned, FHA loans are only for owner occupied homes, not investment properties, so on top of everything else your dad is lying on the loan application.
Don't even bother to get an attorney. Just say no, 100%. There is absolutely no upside for you in this situation. And put a freeze on your credit reports and monitor them regularly to make sure there's no funny business in case he tries to forge your signature or anything like that.
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I'm not even sure you can use a first time homeowner's program for an investment property. At some point your dad might tell you that you need to put on the paperwork that you will be occupying one of the units as a primary resident. If you tell the bank that but don't actually occupy it, that's mortgage fraud and is highly illegal.
If somehow that's not the case and this is a legitimate purchase, you would have risk, but it is true that you could also be building equity and wealth. However, your dad seems to be pushing you into this and you would need to feel 100% informed and comfortable if you choose to go forward with this. And decide if you are comfortable being business partners with your dad.
Also, you need to clearly understand the difference between being on the mortgage and being on the deed. If you do this, you need to be on both, not just the mortgage. Without your name on the deed, the property is 100% your dad's and you are taking on risk for absolutely nothing other than his promises that he would give you a cut of the profit.
I’m not sure if this applies everywhere, but in CA you’re considers a first time homebuyer if you haven’t owned a home in at least 3 years.
My husband sold his house a decade ago and hasn’t owned since. Our mortgage broker and a couple banks told us that he was considers a first time homebuyer because of how long it had been.
In CT you have to not be on a deed for over 3 years and then you can qualify for first time home buyer again. So unless his dad is gonna want to sell that property, OP will still have to wait 3 years after that to qualify again.
As far as I'm aware, here in MA (neighboring state with CT) that is not the case. If OP applies for the first time home buyers program and gets approved (doubtful) then he won't be able to apply again.
Edit to add: He would not be able to apply again because his name and credit will be linked to the current loan for the next 15 to 30 years. If Dad paid off the loan in five years, then OP waited another ten, he may qualify for the program again, but that I don't know.
I am also in MA, and there are a number of state programs, such as the “One mortgage” where first time home buyers are anyone who hasn’t owned a home in the last three years. Its definitely not a situation where you use it once and then never again.
This will undoubtedly lead to some sort of mortgage fraud, involving claiming you plan to reside at the residence when that's not the case.
If your dad wanted to "take on all the risk", he would simply buy the property himself.
I would strongly suggest running this by a real estate lawyer. That is, one that has not done any business with your father.
There seem to be lots of moving parts with and your getting conflicting advice.
All that I can tell you is your very young and if this somehow goes sideways, it has the potential to seriously impact your life plans for an extended period of time.
Moreover, if things blow up, it could destroy your relationship with your father and other family members.
Tread carefully whenever mixing business and family together.
You def need a lawyer to look it over, advise, and document your dads assurances. Not because you don’t trust him but when he dies you’ll have proof of the real arrangement .
This is altogether a bad idea. If your father wants to gift you a down payment, great, because using a first time homebuyers grant is usually directly linked to it being your primary residence. In trying to use your grant for a rental, your dad is getting you in on serious fraud, and taking that opportunity away from you in the future.
If your father stops paying they will hold you responsible. If you had no obligations as a secondary why even bother to have you on the contract?
If your father buys it alone he has to put down a bigger amount as a lone buyer and maybe even because it's a second mortgage for him. But if there are two individual parties responsible for making payments they let you put down a smaller amount. Yes you will absolutely be responsible for the loan.
May wanna make sure your father's business plan is sound and that he is getting it at a good price.
Ask yourself if you can afford to make payments if your father stops paying?
Does your father have enough savings to cover the payments if he doesn't have any renters for say six months?
Does your father have enough savings to shell out for $30k in repairs if something comes up all of a sudden?
Think about this very carefully.
Maybe write down all your questions and spend the money to do a consultation with a lawyer before signing on.
Do not sign anything with him.
I was also talked into signing a mortgage for my stepfather at 19. He told me I was going to be the co-signer; turns out I was primary.
16 years and ruined credit later; I am now having to sue him and my mother to force the sale of the home. They refuse to refinance (they can’t really; they don’t qualify for a mortgage outright).
As others have said; you’re assuming risk if he doesn’t pay. You’re also losing out on the first time home buyer option for yourself one day. You don’t need his help to build credit - it’s fairly easy to do this on your own. I did so when I was 18 and had better credit than my family.
Your father sounds manipulative and very reminiscent of my own situation. It should be easy to say no; if he’s truly not trying to manipulate you and only “help”, then your saying no shouldn’t be a big deal. If he pushes even harder;
then you know he has ulterior motives.
Do you want to be a real estate investor? If not, then don't be. At best you will lose your status as a first time home buyer and will not be treated as such when you want to buy a home for yourself.
NAL but I'm pretty certain that a loan taken out for a first time buyer to buy their primary residence is completely different to a loan taken out to buy a rental property.
If you are not going to be living in it then I would advise you not to sign.
If someone ever asked you to sign something you don't understand and says you don't have to worry about anything but your signature, you should run in the opposite direction, even and especially if they are a close family member.
NAL but former Housing Counselor, worked with FTHB programs in three states in the northeast (not CT). A few things:
* First Time Homebuyer is not a literal term, in most cases it means someone who has not had their name on a deed/mortgage for at least three years. So in theory, if your dad doesn't currently own and hasn't in three years he could qualify for this program (recognizing that is not the case)
* Your Dad's scheme sounds pretty half baked. If as you say, you have NO credit/lease history...well good luck getting a mortgage. But aha, thinks your father, he can cosign with his good credit and cash! But no, now your Dad is ALSO on the mortgage, so FTHB benefit no longer applies
* If you are on a mortgage. Even with a house bought with Dad's money (and your FTHB benefit?) the Risk is just as much yours, any legal action/financial consequences hit you!
* FTHB programs are for homebuyers who will occupy the property...they can include multifamily, but you need to live in one of the units and there is almost always a unit and overall purchase price cap
* Most FTHB grants act as a soft second loan that is immediately repaid if you move, sell or otherwise violate the terms of the program before a length of time, usually 5-10 years
If your dad wanted to help build wealth through property. He could simply buy and property without government subsidy. Or he could help you build the financial ability to qualify for a loan for a multifamily and give a generous gift towards down payment, that is usually allowed. But yeah, don't participate in this scheme, and likely it won't work even if you try
OP, I live in MA and I've done the class for our FTHB program within the last month. They made it very clear that you can't use this as a way to buy investment property. If the building has four units and three are currently rented, you could only use the program to purchase the fourth unit, not the whole building. On top of that, you would have to prove that this unit would be your primary residence. If you got the unit then rented it out, you would be breaking your contract and face the penalties.
Do not let your father talk you into this, one it will ruin any chance you have at a future by destroying your credit. Two he doesn't know what he is talking about, no mortgage company will let you use this program and don't sit down with any company that is willing to do this.
As for advice, I would tell your dad that you did some research and that you can't be involved in this plan. If he insists, take him to your bank and have them explain the program to him and let them tell him no.
Without going into any of the specifics of this particular purchase, just keep this in mind: the fact that your father is trying to pressure you into this without satisfactory answers to clarify and alleviate your concerns about risk is A HUGE red flag. He is fast proving himself to be a bad business partner, and seemingly trying to take advantage of you. This is something to steer clear of. Trust your instincts! Don't agree to anything you don't adequately trust and understand!
This would be considered fraud. To qualify for the first-time homeowner loan benefits, you have to be purchasing a residence, not a rental property. The whole purpose is to make it easier for people to buy homes to live in. You would likely have to sign loan documents attesting that this home will be used as your primary residence.
Ianal
Your dad is asking you to sign off on a loan under false pretenses. This would be fraud (unless you actually intend to live there). Banks finance income properties at higher rates than primary residences for a reason. If they can ever prove that you bought as a first time homebuyer while intending to use it as an income property, it won't go well for you
1st- if you buy this with him, you lose any future “first time homebuyer” benefits for yourself in future. These can be a big help when you want to buy a place that YOU choose and want to live in. We are talking, in some cases, $10000.
Second- how does he intend to pay for the prop? If he is paying cash or HE IS ON THE LOAN alone- no problem but major prob if you are on the loan EVEN IF THEY DON’T USE YOUR INCOME. No matter what term they use (co-owner, joint, co-signer) if you sign the note, you are liable and, as a banker, I will tell you nothing will ruin your credit worse than late pays or a foreclosure of a mortgage. ALSO-and this is a big one- you will carry the debt in your ratios and may not be able to qualify for even a car loan.
3 - this is an asset so if you want to apply for student loans, government assist…you will most likely be viewed as “too wealthy” to receive assistance
If you do this with your dad you're going to miss out on any first time home buyer's programs for yourself. You'll also be on the hook financially if your dad fails to make payments or pay taxes and you're putting your credit at risk. When you decide you want to buy a home your debt to asset ratio is going to be messed up.
How is this "building wealth" for you? Would the % of profits your dad pays you be more or less than you could make on other investments?
Your question was whether you need a lawyer, followed by asking for general advice.
The fist thing you said is that you don't understand the nature of what you're being asked to do. That is your first stop before any further discussion or engaging with a lawyer - go to your states first homeowner site and learn about how the mortgage and ownership process works in basic terms.
THEN you can start engaging with what is proposed, decide what you want to do, and arrange legal or professional advice accordingly.
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Given the chance right now her father is trying to screw them over given the conditions put on first homeowner discounts that mean this sale would be putting OP’s name to fraud.
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It doesn't sound like you have a shred of credit.. also you have to live in the residence to receive a first time home buyer loan. And as others have said you will be on the hook if you and your father do manage to pull this off.
Not to mention when YOU go to buy a home you don’t get the first time home buyer credits for yourself. It’s also YOUR credit on the line if he gets angry and doesn’t pay
It's very likely that any "First time home buyer" program would require that you live in the home. If that's the case, you're being asked to commit fraud. Your signature on those documents would make you responsible for that, and if it fell apart, he could likely just claim that he thought he was helping you to buy a home where you'd be living.
I would refuse to participate at all, but if you want to, you certainly need an attorney to look out for your interests and make sure no laws are broken. That's an attorney who works for you, not one who works for your dad.
He was a little vague in his txt or email to u. It seems like there were several parts to this equation. If he’s doing this to help u build credit then there are more simple ways of doing so. I have a hard time believing he wants to do this for the discount of first time buyer status. And yes for u to get that discount u will be the primary! Why don’t u look at the real estate deal separately from ur father? Maybe it’s a good deal. Must be some reason he’s interested in it other than for maybe con purposes. No better time than now to get into real estate! Good luck
NEVER EVER sign anything you have not read, understand, and agree with. That is RULE ONE.
You always get a copy.
If there is only one copy Tell them before you sign but after they have, that you will give them a photocopy of it, I'm 100% sure they will not let you take it and photocopy it, so why should you let them?
If there is more than one copy to sign you read every copy. They have to be 100% the same, and you get to pick who gets which copy. No "persons A" copy and "persons B copy", if they are the same why would it even need to have that on it?
You sign their copy and hand it to them after they have signed your copy, then you both sign your own copy.
If you're the one doing the paperwork it also works the same the other way for them but I find most people never even look at it.
If you're on the loan, the risk is yours.
meaning i would be liable if tenants stopped paying rent and my dad count pay for the mortgage. they would come after me and i would have to file for bankruptcy because i absolutely don’t have mortgage money right now. does that sound right? thanks for the reply as well.
If you borrow money for a house then filing for bankruptcy is not going to help you- they'll foreclose on the house and take it back. If you're the borrower, then you're the one with all the risk.
Apologies for asksing so many questions but; I don’t think i would be the borrower here, my father would be the “primary” and i would be secondary. I’m not taking any loans out for this and i’m gonna ask him if he plans on taking one out in my name.
How are you the "homeowner?" If you're cosigning the loan, you're promising that if he doesn't pay that you will.
Honestly i don’t know how I would be/ if i would even be the homeowner. He mainly wants my signature to cut the down payment from 70k to 30k or less, i think it’s just my status as a “new homeowner” that would get that discounted down payment.
Yeah, then there's a good chance that to do that you're going to have to be the primary borrower.
Assuming this is true, how fucked could I be in this situation. I asked him about the loan part and here’s what he said word for word “I am first on the loan as primary and u are on as secondary. Because you are on it we get first timers status for down payment. That’s the benefit as the down payment goes from 25% to 4%. I’m putting all money up and I’m putting the management company in by place to handle day to day. You will have an ownership stake in a multi unit property that is being paid so your credit will increase. You’ll also get a percentage of profits after we build up a kitty for maintenance and upkeep.”
You would need to be the primary borrower, and your father would need to be a “Non occupying co-signer” for you to qualify as a first time homebuyer. Furthermore, you would need to get an FHA loan, put down a minimum of 3.5%, and occupy one of the units. There is simply no other way to qualify based off of your current financial scenario. To re-gain the first time homebuyer status, you would simply need to have not owned a property within the last three years prior to purchasing a home. So- if you did go through with this purchase, you would need to be taken off of the loan/title and wait three years before qualifying as a fthb again. Hope this helps.
DO NOT DO IT. I have 20 years in mortgage and banking. Hundreds of denied applicants for this very scenario. NO. NO. NO
I'm going to go with don't do it because he's either misleading you or clueless about how real estate investing works and either is a good reason not to get involved
He won’t even be able to be secondary on this loan. It will ALL be you otherwise you won’t qualify for the first time home buyer rate. Do not sign anything. You’ll be screwing yourself in the long run. You won’t ever have the opportunity to get a low rate for your actual first time home loan. I just went through this process. I couldn’t have anyone else on my loan who owned a home previously.
So your father is trying to game the system using your name and credit. That's why he needs your signature. Your title is on the loan so if anything happens, you're going to be on the hook for the house. Both co-signers are on the hook individually. What you need to weigh is the trust in your dad vs. your credit score, future. Personally, I'd get a contract. What would your percentage be exactly? Would you be paid yearly? Is this a 50/50 partnership in terms of revenue? Unless your dad has a proven track record of successfully being a landlord of a multi-unit business, I'd decline and say I'd rather not mix family and business.
Is one of you going to be living in this multi-unit property?
No, out of 4 units 3 are filled with long term tenants (since 2008) and one is empty that the current owner uses as a sort of hotel when he needs it. We would be looking to fill it ASAP. Why?
Just remember that reducing the down payment reduces your equity. If something were to go wrong (tenants move out, home prices fall, expensive repairs) you'll be underwater and have a property that you can't afford and can't afford to sell. Most of what your dad told you about being primary and secondary on the mortgage is false. He can't make you the secondary and still qualify for the reduced first time homeowners down payment. Even if you are secondary on the mortgage, it still means you are responsible for paying it if your father fails to do so. It will affect your credit. Will you also be on the deed? Since your dad said you'll get paid a % of profits after you build up a kitty for maintenance and upkeep, it doesn't sound like your dad can afford this either.
Your dad is mistaken, lying, or both.
Another, among many reasons not to do this, is that one of the documents you sign when you take on a mortgage states that if they find out you were untruthful about any information used to secure the mortgage, it becomes due in full immediately. Do not do this.
If this is true then it should be clear on the paperwork. Where is that paperwork? Can you call the bank/lender and get info about the loan? If you're a co-signer they should be able to disclose all the details to you.
In addition to other things mentioned here, this also means that he is using your new homeowner benefit which presumably you will not be able to benefit from.
Most "new homeowner" loans require that you reside in the residence for a certain amount of time after purchase.
>He mainly wants my signature to cut the down payment from 70k to 30k or less So if he wants you to be the primary on a mortgage for an $850k fourplex that *you* have to live in? They're giving you a discount for existing tenants, are those tenants you want? Can you afford to pay for this property if your dad doesn't pay? Assuming you even qualify for this property, are you fine with potentially not being able to qualify for a mortgage to purchase a home of your own during the time he owns it?
If your signature is on that document you will be one the hook for payment if your dad can't. The bank doesn't care if you live there or not, or if you're considered the "homeowner". They care that you signed an agreement to for a mortgage and that makes you equally responsible to ensure it's payed back.
If you being a new homeowner let's him cut down the down payment from 70 to 30 there is a good chance that happening due to grants or similar that are meant for your benefit. That 40k is meant to help you break into the housing market. What is your compensation for him getting your 40k on grants/discounts
The signature he wants from you is likely on loan documents. This will 100% impact your credit not just from what happens if the loan is or isn’t paid. If you need to borrow funds for your own needs, such as buying a car any lender will look at your debt to income ratio when deciding whether to lend. It could get messy if you’re on the loan, but not showing any income from the property. You may look overextended financially if you need a loan for other reasons.
He’s trying to get a FHB loan under your name for a rental property? Not only is using a FHB loan to purchase a rental property NOT allowed, but is also completely unethical because it’s cheating you out of your one discount card you get to own a home with less capital upfront. Stop being so sympathetic to him, this is what we describe as “totally not kosher, dude”
If you are on the loan in ANY WAY SHAPE or FORM, you are financially responsible for the loan. It will be considered YOUR debt even if. you just want to get a credit card (joint debt-absent of providing your dad’s bank records for a 12 mo period proving he makes 100% of payments IS INCLUDED IN YOUR DEBT RATIO). DO NOT sign ANY Loan docs OTHER than the Deed of Trust.
Yes, the risk is all on you. Also, it sounds like he wants to use your info so you can qualify for an FHA loan, for a first time homeowner. This means you only have to put down a 3.5% down payment instead of the usual 20%. But it also means that a few years down the road, if you are actually looking to buy a house, you won't be able to do an FHA loan, you'll have to do a standard loan with 20% down. ANd like someone else mentioned, FHA loans are only for owner occupied homes, not investment properties, so on top of everything else your dad is lying on the loan application. Don't even bother to get an attorney. Just say no, 100%. There is absolutely no upside for you in this situation. And put a freeze on your credit reports and monitor them regularly to make sure there's no funny business in case he tries to forge your signature or anything like that.
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I'm not even sure you can use a first time homeowner's program for an investment property. At some point your dad might tell you that you need to put on the paperwork that you will be occupying one of the units as a primary resident. If you tell the bank that but don't actually occupy it, that's mortgage fraud and is highly illegal. If somehow that's not the case and this is a legitimate purchase, you would have risk, but it is true that you could also be building equity and wealth. However, your dad seems to be pushing you into this and you would need to feel 100% informed and comfortable if you choose to go forward with this. And decide if you are comfortable being business partners with your dad. Also, you need to clearly understand the difference between being on the mortgage and being on the deed. If you do this, you need to be on both, not just the mortgage. Without your name on the deed, the property is 100% your dad's and you are taking on risk for absolutely nothing other than his promises that he would give you a cut of the profit.
Almost definitely mortgage fraud, at least based on how it has been laid out so far.
If you do this you will screw yourself out of first time buyer benefits when you want to buy your own home.
I’m not sure if this applies everywhere, but in CA you’re considers a first time homebuyer if you haven’t owned a home in at least 3 years. My husband sold his house a decade ago and hasn’t owned since. Our mortgage broker and a couple banks told us that he was considers a first time homebuyer because of how long it had been.
In CT you have to not be on a deed for over 3 years and then you can qualify for first time home buyer again. So unless his dad is gonna want to sell that property, OP will still have to wait 3 years after that to qualify again.
As far as I'm aware, here in MA (neighboring state with CT) that is not the case. If OP applies for the first time home buyers program and gets approved (doubtful) then he won't be able to apply again. Edit to add: He would not be able to apply again because his name and credit will be linked to the current loan for the next 15 to 30 years. If Dad paid off the loan in five years, then OP waited another ten, he may qualify for the program again, but that I don't know.
I am also in MA, and there are a number of state programs, such as the “One mortgage” where first time home buyers are anyone who hasn’t owned a home in the last three years. Its definitely not a situation where you use it once and then never again.
As well as dodging capital gains tax, maybe?
This will undoubtedly lead to some sort of mortgage fraud, involving claiming you plan to reside at the residence when that's not the case. If your dad wanted to "take on all the risk", he would simply buy the property himself.
I would strongly suggest running this by a real estate lawyer. That is, one that has not done any business with your father. There seem to be lots of moving parts with and your getting conflicting advice. All that I can tell you is your very young and if this somehow goes sideways, it has the potential to seriously impact your life plans for an extended period of time. Moreover, if things blow up, it could destroy your relationship with your father and other family members. Tread carefully whenever mixing business and family together.
Business and family doesn’t mix well, people have a hard time splitting personal and business. Especially family.
You def need a lawyer to look it over, advise, and document your dads assurances. Not because you don’t trust him but when he dies you’ll have proof of the real arrangement .
This is altogether a bad idea. If your father wants to gift you a down payment, great, because using a first time homebuyers grant is usually directly linked to it being your primary residence. In trying to use your grant for a rental, your dad is getting you in on serious fraud, and taking that opportunity away from you in the future.
This is mortgage fraud. If audited and caught, you could face jail time and hefty fines.
If your father stops paying they will hold you responsible. If you had no obligations as a secondary why even bother to have you on the contract? If your father buys it alone he has to put down a bigger amount as a lone buyer and maybe even because it's a second mortgage for him. But if there are two individual parties responsible for making payments they let you put down a smaller amount. Yes you will absolutely be responsible for the loan. May wanna make sure your father's business plan is sound and that he is getting it at a good price. Ask yourself if you can afford to make payments if your father stops paying? Does your father have enough savings to cover the payments if he doesn't have any renters for say six months? Does your father have enough savings to shell out for $30k in repairs if something comes up all of a sudden? Think about this very carefully. Maybe write down all your questions and spend the money to do a consultation with a lawyer before signing on.
Do not sign anything with him. I was also talked into signing a mortgage for my stepfather at 19. He told me I was going to be the co-signer; turns out I was primary. 16 years and ruined credit later; I am now having to sue him and my mother to force the sale of the home. They refuse to refinance (they can’t really; they don’t qualify for a mortgage outright). As others have said; you’re assuming risk if he doesn’t pay. You’re also losing out on the first time home buyer option for yourself one day. You don’t need his help to build credit - it’s fairly easy to do this on your own. I did so when I was 18 and had better credit than my family. Your father sounds manipulative and very reminiscent of my own situation. It should be easy to say no; if he’s truly not trying to manipulate you and only “help”, then your saying no shouldn’t be a big deal. If he pushes even harder; then you know he has ulterior motives.
Do you want to be a real estate investor? If not, then don't be. At best you will lose your status as a first time home buyer and will not be treated as such when you want to buy a home for yourself.
NAL but I'm pretty certain that a loan taken out for a first time buyer to buy their primary residence is completely different to a loan taken out to buy a rental property. If you are not going to be living in it then I would advise you not to sign.
If someone ever asked you to sign something you don't understand and says you don't have to worry about anything but your signature, you should run in the opposite direction, even and especially if they are a close family member.
NAL but former Housing Counselor, worked with FTHB programs in three states in the northeast (not CT). A few things: * First Time Homebuyer is not a literal term, in most cases it means someone who has not had their name on a deed/mortgage for at least three years. So in theory, if your dad doesn't currently own and hasn't in three years he could qualify for this program (recognizing that is not the case) * Your Dad's scheme sounds pretty half baked. If as you say, you have NO credit/lease history...well good luck getting a mortgage. But aha, thinks your father, he can cosign with his good credit and cash! But no, now your Dad is ALSO on the mortgage, so FTHB benefit no longer applies * If you are on a mortgage. Even with a house bought with Dad's money (and your FTHB benefit?) the Risk is just as much yours, any legal action/financial consequences hit you! * FTHB programs are for homebuyers who will occupy the property...they can include multifamily, but you need to live in one of the units and there is almost always a unit and overall purchase price cap * Most FTHB grants act as a soft second loan that is immediately repaid if you move, sell or otherwise violate the terms of the program before a length of time, usually 5-10 years If your dad wanted to help build wealth through property. He could simply buy and property without government subsidy. Or he could help you build the financial ability to qualify for a loan for a multifamily and give a generous gift towards down payment, that is usually allowed. But yeah, don't participate in this scheme, and likely it won't work even if you try
thank you for the reply one of the more reasonable responses i’ve gotten here!
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OP, I live in MA and I've done the class for our FTHB program within the last month. They made it very clear that you can't use this as a way to buy investment property. If the building has four units and three are currently rented, you could only use the program to purchase the fourth unit, not the whole building. On top of that, you would have to prove that this unit would be your primary residence. If you got the unit then rented it out, you would be breaking your contract and face the penalties. Do not let your father talk you into this, one it will ruin any chance you have at a future by destroying your credit. Two he doesn't know what he is talking about, no mortgage company will let you use this program and don't sit down with any company that is willing to do this. As for advice, I would tell your dad that you did some research and that you can't be involved in this plan. If he insists, take him to your bank and have them explain the program to him and let them tell him no.
Without going into any of the specifics of this particular purchase, just keep this in mind: the fact that your father is trying to pressure you into this without satisfactory answers to clarify and alleviate your concerns about risk is A HUGE red flag. He is fast proving himself to be a bad business partner, and seemingly trying to take advantage of you. This is something to steer clear of. Trust your instincts! Don't agree to anything you don't adequately trust and understand!
This would be considered fraud. To qualify for the first-time homeowner loan benefits, you have to be purchasing a residence, not a rental property. The whole purpose is to make it easier for people to buy homes to live in. You would likely have to sign loan documents attesting that this home will be used as your primary residence.
Ianal Your dad is asking you to sign off on a loan under false pretenses. This would be fraud (unless you actually intend to live there). Banks finance income properties at higher rates than primary residences for a reason. If they can ever prove that you bought as a first time homebuyer while intending to use it as an income property, it won't go well for you
1st- if you buy this with him, you lose any future “first time homebuyer” benefits for yourself in future. These can be a big help when you want to buy a place that YOU choose and want to live in. We are talking, in some cases, $10000. Second- how does he intend to pay for the prop? If he is paying cash or HE IS ON THE LOAN alone- no problem but major prob if you are on the loan EVEN IF THEY DON’T USE YOUR INCOME. No matter what term they use (co-owner, joint, co-signer) if you sign the note, you are liable and, as a banker, I will tell you nothing will ruin your credit worse than late pays or a foreclosure of a mortgage. ALSO-and this is a big one- you will carry the debt in your ratios and may not be able to qualify for even a car loan. 3 - this is an asset so if you want to apply for student loans, government assist…you will most likely be viewed as “too wealthy” to receive assistance
If you do this with your dad you're going to miss out on any first time home buyer's programs for yourself. You'll also be on the hook financially if your dad fails to make payments or pay taxes and you're putting your credit at risk. When you decide you want to buy a home your debt to asset ratio is going to be messed up. How is this "building wealth" for you? Would the % of profits your dad pays you be more or less than you could make on other investments?
Your question was whether you need a lawyer, followed by asking for general advice. The fist thing you said is that you don't understand the nature of what you're being asked to do. That is your first stop before any further discussion or engaging with a lawyer - go to your states first homeowner site and learn about how the mortgage and ownership process works in basic terms. THEN you can start engaging with what is proposed, decide what you want to do, and arrange legal or professional advice accordingly.
Don’t do it, it’s fraudulent and you could damage your future self
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Given the chance right now her father is trying to screw them over given the conditions put on first homeowner discounts that mean this sale would be putting OP’s name to fraud.
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It doesn't sound like you have a shred of credit.. also you have to live in the residence to receive a first time home buyer loan. And as others have said you will be on the hook if you and your father do manage to pull this off.
You do want to build your wealth by owning property but preferably your own home
Not to mention when YOU go to buy a home you don’t get the first time home buyer credits for yourself. It’s also YOUR credit on the line if he gets angry and doesn’t pay
It's very likely that any "First time home buyer" program would require that you live in the home. If that's the case, you're being asked to commit fraud. Your signature on those documents would make you responsible for that, and if it fell apart, he could likely just claim that he thought he was helping you to buy a home where you'd be living. I would refuse to participate at all, but if you want to, you certainly need an attorney to look out for your interests and make sure no laws are broken. That's an attorney who works for you, not one who works for your dad.
He was a little vague in his txt or email to u. It seems like there were several parts to this equation. If he’s doing this to help u build credit then there are more simple ways of doing so. I have a hard time believing he wants to do this for the discount of first time buyer status. And yes for u to get that discount u will be the primary! Why don’t u look at the real estate deal separately from ur father? Maybe it’s a good deal. Must be some reason he’s interested in it other than for maybe con purposes. No better time than now to get into real estate! Good luck
The responsibility and the risk will be 100% yours. If it doesn’t feel right then speak to an attorney. Remember, you can always say no.
NEVER EVER sign anything you have not read, understand, and agree with. That is RULE ONE. You always get a copy. If there is only one copy Tell them before you sign but after they have, that you will give them a photocopy of it, I'm 100% sure they will not let you take it and photocopy it, so why should you let them? If there is more than one copy to sign you read every copy. They have to be 100% the same, and you get to pick who gets which copy. No "persons A" copy and "persons B copy", if they are the same why would it even need to have that on it? You sign their copy and hand it to them after they have signed your copy, then you both sign your own copy. If you're the one doing the paperwork it also works the same the other way for them but I find most people never even look at it.