Virginia parents want their 25-year-old son to co-sign a $900k loan against the share of the family home they gifted him: ‘They asked me if they can use my income to apply for the home equity loan’

Getting gifted a 25% stake in a 1.2 million dollar house at 25 sounds like an incredibly generous thing until the day your parents sit you down and explain what they would like to do with that 25%

If you told me this morning that I'd read a story that'll make me feel grateful my parents aren't about to gift me a ton of money anytime soon, I'd tell you you're crazy. But what do you know? Life and the internet are full of surprises.

Like what you see? Follow Us and Add Us as a Preferred Source on Google. 

Author image for Etai Eshet Etai Eshet
Add as a preferred
source on Google
Advertisement
  • Man holding a glass of juice at kitchen counter, turning back in casual home kitchen.
    via Getty Images For Unsplash+

    Man standing at a kitchen counter holding a glass of juice, turning to look back in a casual home setting.

    Image is representative only and does not depict the actual subjects of the story.

  • Parents want me to sign on a $900k home equity loan.

    I'm 25, a masters student, and have been working for less than a year. I make about 60k. Based on job offers I have gotten, I expect to earn around 120k starting salary in 1-1.5 years.
    via GoldBackground2280
  • I live with my parents currently. My current house is 1.2 million dollars worth, and my parents gifted me a 25% ownership stake in it, my mother has 50%, and my 18m brother has 25%.
    via GoldBackground2280
  • My parents want to take a home equity loan because the house is fully paid off, and they want to invest into a business property with some relatives to buy it cash.
    via GoldBackground2280
  • However, even though my parents are high earners, my dads name isn't on the house title, so my parents want to use
    via GoldBackground2280
  • mine and my mothers credit to apply for a HELOC. They're expecting to get around 900k.
    via GoldBackground2280

  • The family real estate situation is one of those arrangements that feels purely like a gift right up until it becomes a negotiating chip. The ownership stake was real, the generosity was real, but somewhere in the fine print of being a co-owner of your childhood home is the possibility that your name and your credit are now part of a financial structure that has its own needs and its own plans. Plans that may or may not align with yours.

  • Man with arms crossed leaning on wall, looking at camera in casual indoor setting.
    via Getty Images For Unsplash+

    Man leaning against a wall with arms crossed, looking at the camera in a relaxed indoor setting.

    Image is representative only and does not depict the actual subjects of the story.

  • The reassurance that applying for a loan will not impact your borrowing ability is the kind of thing that sounds very clean when a bank says it and gets significantly more complicated when you are actually sitting across from a mortgage lender two years later trying to buy your own place. A 900k line of credit attached to your credit profile, even an undrawn one, is a liability in the eyes of a lender trying to figure out how much house you can afford. The bank talking to your mother was answering a different question than the one that actually matters here.

  • They asked me if they can use my income to apply for the HELOC. I would rather my name not be on the loan. Ive been saving up money to move out,
    via GoldBackground2280
  • and if I get a decent job offer after I graduate, I would move to a different state/city and could see myself buying some property.
    via GoldBackground2280
  • When voicing this and suggesting I just relinquish my 25% ownership stake to my father so he can apply for the HELOC instead (they want all borrowers to be
    via GoldBackground2280
  • owners), my mother said she spent some time. talking to the bank, and they said that just applying for the loan will
    via GoldBackground2280

  • There is a specific pressure that comes with being the financially responsible young person in a family that needs something from you. The ask gets framed around trust, around family investment, around the fact that it might not even be used. Each individual piece of the argument is reasonable enough on its own. Together they add up to a 25-year-old with less than a year of work experience and a 60k income co-signing the financial equivalent of a down payment on a second house.

  • not impact my borrowing ability, and my parents aren't even sure if they will take that line of credit, or not.
    via GoldBackground2280
  • If they do, they would sell some of their rental properties like townhomes to make up for it.
    via GoldBackground2280
  • I am getting older and want to become fully independent. I'm worried that this has the potential to impact if I can get a mortgage in the near future.
    via GoldBackground2280
  • Would have a 900k HELOC, even if unwithdrawn, make a lender more likely to hesitate or reject my
    via GoldBackground2280

  • Wanting to relinquish the ownership stake rather than carry the loan liability is actually a pretty clear-eyed solution. It solves the problem cleanly and does not leave a 900k anchor on a credit profile that is supposed to help fund an independent life in a different city.

    The house was a gift. The loan is a different conversation entirely.

  • mortgage? Am I right to worry that It will substantially affect my borrowing ability?
    via GoldBackground2280
  • squeeshka Being attached to a loan will absolutely impact your borrowing ability.
    via GoldBackground2280
  • PsychLegal Mind No, no and no! It potentially creates a lifetime liability and compromises personal financial outlook. There is no guarantee of financial success in a business venture.
    via GoldBackground2280
  • dustiwang What a strange arrangement. Did your parents initially buy the house and gift you and your brother 50%, or was it left to them by another relative? Perhaps offer them a discounted rate to buyout your equity position, but do not sign on any loans.
    via GoldBackground2280
  • WineOrWhine64 Don't do it. Your parents are risking the house to invest in business with relatives. How crazy is that!!!
    via GoldBackground2280
  • boosayrian Your parents are trying to take out a HELOC for 75% of the home's value?!?! This has red flags all over it. Sign over your stake to someone else if you must, but absolutely do not sign for this loan.
    via GoldBackground2280
  • freedomfromthep NO! If they stop paying for any reason, you are on the hook for the bill. Do you have $900k?
    via GoldBackground2280
  • Powerful_Tip_7260 No If you want a second opinion No
    via GoldBackground2280
  • Wild Pomegranat Your parents either don't understand the implications of this loan for you, or are lying to you about it. Either way that's not someone whose business acumen you should trust.
    via GoldBackground2280
  • You shouldn't do this at all, but if you really want to, talk to a financial advisor first (one paid by you, not your parents) to get unbiased expert advice on what this will mean for you.
    via GoldBackground2280
  • ZinniasAndBeans No. No. No. No. No. Do not do this.
    via GoldBackground2280

Like what you see? Follow Us and Add Us as a Preferred Source on Google. 

Tags

homeowner parenting loan adult children son parents
Scroll Down For The Next Article

Also From FAIL Blog

Boss writes 3-page document critiquing working mom's productivity, she responds by handing in her resignation

Boss writes 3-page document critiquing working mom's productivity, she responds by handing in her resignation

Trending Now

30-year-old quits her job of 6 years after new coworker, Ben, keeps stealing her work and credit, and faces zero consequences despite multiple complaints: ‘I addressed it with my manager, director, and HR. After a year I simply couldn’t take it anymore’

30-year-old quits her job of 6 years after new coworker, Ben, keeps stealing her work and credit, and faces zero consequences despite multiple complaints: ‘I addressed it with my manager, director, and HR. After a year I simply couldn’t take it anymore’

01
Clever homeowner gets even with mean neighbor, makes the entire neighborhood more accessible while neighbor loses 42 inches of lawn space

Clever homeowner gets even with mean neighbor, makes the entire neighborhood more accessible while neighbor loses 42 inches of lawn space

02
Manager deletes event planner's spreadsheet, insists on doing it their way, which takes more time; their micromanagement predictably backfires: 'He insisted his way was better. Alright then'

Manager deletes event planner's spreadsheet, insists on doing it their way, which takes more time; their micromanagement predictably backfires: 'He insisted his way was better. Alright then'

03
Landlord charges every tenant a flat $500 move-out cleaning fee for years, hits 3 families at once, they group, sue together, and win every cent back plus legal fees: ‘We stood our ground. We filed a collective action, and yesterday we won’

Landlord charges every tenant a flat $500 move-out cleaning fee for years, hits 3 families at once, they group, sue together, and win every cent back plus legal fees: ‘We stood our ground. We filed a collective action, and yesterday we won’

04
Worker refuses to arrive an hour early to shift despite coworkers' demands, insists on clocking in and out right on time: ‘They complain that I come in late’

Worker refuses to arrive an hour early to shift despite coworkers' demands, insists on clocking in and out right on time: ‘They complain that I come in late’

05
Top-performing star technician quiet quits and begins "working to rule," weaponizing company policy after being repeatedly passed up for promotion: 'Update: After 6 months, they've finally noticed that the quality of my work has dropped

Top-performing star technician quiet quits and begins "working to rule," weaponizing company policy after being repeatedly passed up for promotion: 'Update: After 6 months, they've finally noticed that the quality of my work has dropped

06
Advertisement