Can I be added to my moms loan?

Question

Hi everyone and thank you in advance for your help.

I live on the same property as my parents and there is a lot of equity in their home and I am trying to assist them with investing that money to increase their passive income. Because of their limited (and declining) income they will probably not qualify to refinance and take advantage of that equity down the road. The benefit of the house currently staying under their name is that the property taxes are greatly reduced because of their age (we live in an area with incredibly high property taxes). So I was wondering if this option is even possible or makes sense - can I be added to their loan? Because then my income will be taken into account when trying to refinance or access a HELOC but then we would also have the benefit of keeping our property taxes where they are. I know very little about this process so thank you for your time and patience.

Daniel Hennek · Answer

Reverse mortgage?

Not knowing the details of your parents situation it's hard to tell what might constitute good advice.  You can certainly look at co-mortgaging with them on a cash out refinance but I'd look long and hard at the math and what you're hoping to accomplish.  If you "know very little about this" then I'm not sure what kind of expertise you have to be "assisting them to invest".  Do you have a securities license?  Are you a financial planner? Do you have any credentials to be offering financial advice?

I'd be real careful about any moves you're making and do the math to see what you could be gaining and what you are risking.  If they just need a little more cash flow to live easier in retirement then a reverse mortgage can be a great option.

If you're trying to "increase their passive income" thinking that will give them the added cash flow now, and one day you can take advantage of that passive income I'd think long and hard about what they'd be sacrificing in order to achieve that end and the differences in their possible lifestyle in one situation vs the other.

Again, not know your details makes it hard to give good advice and I understand that I don't have all the facts.  Just speaking to some red flags raised in your post...

Layla Steinwald · Answer

@Daniel Hennek thank you for your reply. What I was referring to when I said I was new to this was the idea of either cosigning or taking over a mortgage so that I would have access to equity. I own several short term and long term rentals and my parents were interested in doing the same. There’s a lot of equity sitting in their home and they wanted to use part of that to purchase a short term rental with my assistance. I was trying to figure out the best way to help them do that.

Layla Steinwald · Answer

Ahh didn’t even think of that. That’s super helpful thank you!

Wayne Brooks · Answer

@Layla Steinwald You wouldn’t be “added to their existing loan”....you would co-sign for a new refinance loan or heloc.