Should I cosign a mortgage with my brother to help him buy a home?

While wanting to help is admirable, there’s a lot of potential downsides here you need to be aware of.

Most conventional loans in Florida you can refinance quickly, but the terms of each can differ. While early payoff penalties are not allowed in Florida, there’s other terms that can put some sort of ‘soak’ period on the loan.

Your credit is affected whether he sticks to his word or not. Being a guarantor in most common usage is the same as cosigning / 2nd party to a mortgage / loan, meaning that the bank is fully resting the loan on both of your credit histories and credit scores. You can not just decide to remove yourself from that obligation once you sign the contract.

This has the immediate effect of reducing your ability to get a mortgage for yourself for your own house in the future. One of the prime criteria that banks look at when underwriting a mortgage is your monthly Debt to Income and your monthly Housing expenditure. Both of those have to be to the banks liking.

It does not matter if your brother pays it in full every month. That payment is also 100% your liability and counts against you, in full, towards your monthly Housing expenses, even if it’s not your primary residence, have never lived there, etc. If your brother decides to not pay you will have to make that payment in full and on time or you will be foreclosed on.

This will be the case for however long you are on that mortgage, which is typically 30 years.

Now, can your brother refinance in a year? Sure. Will he? Who knows. I can tell you a lot of people who are normally reasonable when faced with a huge economic commitment will balk, drag their heels, or just flat out refuse. And you will have no true power or ability to get out of the commitment without 100% of his cooperation including him getting his finances in order.

Is there a way to force him to refinance? Not really with how most conventional financing is structured. Easiest way to try and do this would be to buy the house outright with cash and then you seller finance it to him.

If he just needs down payment there are programs to help for that or you can simply gift it (with restrictions). If it’s low credit score there’s programs for that as well. Which means he’s way below threshold on one or both of those, which I’m sorry to say means he’s extremely high risk….. and you should be honest with yourself about that reality.

If he’s truly only a year away (doubtful, because he likely would have already done it if that was the case), my recommendation is to tell him to work on his credit or down payment or whatever is lacking for the next 10 months and go solo. The risk is just too great to you and his waiting timeline is too short to make the risk sensible.

The only time you should feel comfortable doing this is if you are 100% ok with paying his mortgage, property taxes, and insurances IN FULL OUT OF YOUR OWN POKCET while he still lives there for free each and every month (because he owns it / is on title) and are ok with having that mortgage deducted from your own buying power for 15-30 years. Oh and keep in mind he can decide NOT pay but still get money from the eventual sale of the house, because he is 50% or 100% owner.

There are TONS of people who were ‘helping out‘ and ended up being on a mortgage for 30 years when ‘plans didn’t work out‘ and had the rest of their life choices chopped significantly because of it. You’re now educated enough about the risks to make a wise and informed decision for yourself