I co-own the house but not the loan, will my credit take a beating in a foreclosure?
Thursday, 2. September 2010
My girlfriend and I got a house a year ago in Maryland. The loan is entirely in her name but the title of the house is in both our name. We are in over our head with this loan and with the state taxes for Maryland going up each year and thus the escrow we are finding it impossible to keep up. When we did a fair market analysis on the house using a local real estate agent we found in just 1 year we have negative ,000 equity in the house. My question is this, if the house goes through foreclosure will my credit be affected? What if we get married before the foreclosure? I’m worried if we get married at the wrong time and we lose the house it will be tied to my name as well. We are thinking if she loses the house maybe I can get one in just my name next year. Anyone knows if this will work? Thanks in advance…..
Some additional details that might help clarify our situation. The house loan is 0,000 or ,300 a month. My girlfriend makes 0 a month. Not nearly enough to pay the mortgage. The idea when we bought it was for me to pay the loan as she doesn’t make enough to pay it herself and with a baby coming we wanted a nice house to raise our son in. She got one of those shady deals where they gave her a 0,000 loan by saying she was self-employed when she in fact she wasn’t. Before this housing and banking collapse you could get a loan without documenting your income and your ability to pay by claiming you’re self-employed. Nice little loop-hole huh? Anyway, she never said she was self-employed mind you but the guy that worked out her loan said he would put in through like this otherwise she would never qualify for a loan. I couldn’t be on the loan because I had lost my house to foreclosure due to a nasty divorce a year before that. It’s now been more than 2 years since my fore
Anna Says:
Well, Well, Well, where goes chivalry?
No, you will not take a beating on your credit score since the mortgage is in her name only; unless you get married before foreclosure, then you are also in hot water.
If you apply for another loan after the two of you marry, her negative credit rating will follow her; so no dice on a new loan.
Now for the practicalities of personal finance. Why did you get into a mortgage that two salaries couldn’t pay? You need a good lesson in personal budgeting. You, two, simply don’t understand the stretch of money and you both need to learn to be frugal (not cheap). Why don’t you start with a "beginner" cottage and work up as you increase your assets.
Plan a budget so that you have SAVINGS every month after paying the overhead and the extras. When you learn that you can’t have everything from the beginning, but must work up to you potential (both in finances and in jobs) will you be financially responsible and happy.
Expert Realtor Says:
This is a common misconception and the answer is no.
The person that signed the contract for the lien on the home is the person on the loan…you have no legal contract with the bank, therefore you cannot be held responsible for the loan.
Now, whether or now you are responsible for losses between you and the co-owner by a contract between you remains to be seen.
The bank has no legal way to sue you or hold you liable.
noitall Says:
I think you’ll find that having your name on file for ownership automatically makes you a target for any foreclosure efforts by the lender. Thus your credit will be affected. But you need to get the real scoop and NOT MARRY until you get it all sorted out. You assume her debts when you get married.
Love Says:
no. as long as your name is not on the mortgage and it doesnt get reported to the credit bureaus then your cool .
Ed Atun Says:
Your credit is not too great after your own foreclosure. The responsibility for the mortgage on the current house is the main consideration for credit reporting purposes. She didn’t pay; her credit gets hurt.
It might be possible that you will have to write explanatory letters to future lenders about why a property in your name (this house with girlfriend) went into foreclosure..