When it comes to questions of lending money or cosigning loans for others, financial expert Andrés Gutiérrez has only one answer: Don't do it.
Lending money to familyCosigning is normally defined as signing and taking financial responsibility for someone else's loan. However, when financial expert Andrés Gutiérrez gets asked to describe it, he defines it as "putting yourself in the way of a firing squad to save someone else."
"What people don't seem to understand is that the cosigner becomes the legal owner of the property, and when the borrower falls into default, the lender goes after cosigner," says Gutiérrez. "The person who's asking for a cosigner has already been deemed unworthy of credit by a lending institution," continues the financial expert, implying the individual asking you to front the loan probably isn't in a good position to ever repay you considering the banks have already denied him/her.
In many instances, the decision is made because the cosigner knows the borrower personallyRead More »from When to Say ‘no’ to Lending Money