Can this create a win/win situation

My best friend wants to buy a house. And I buy and hold properties for rent where we live. I’m wondering if I could co-sign the loan with him, therefore getting an Owner-Occupied loan and turn around to L/O to him. His credit is not the greatest, therefore needs my help. Would this work out?

If you don’t mind co-signing, why don’t you just co-sign on the note with him so he can get the house? No need to worry about L/Oing it to him, he will own the house, you just assist as a guarantor on the note. He can sign some kind af agreement with you to give you security if he fails to make the payments.

Seems like the simplest way to go about it without having to worry about being less than totally honest with the bank.

You can sign on the loan, but I wouldn’t. There are too many things that could go wrong (that you won’t be able to think of now!). Although you could legally structure it to protect yourself, you won’t be able to do anything to save the friendship. Just my opinion.


I wouldn’t recommend co-signing either. I was just suggesting if it is something you are going to do anyway, why not just do it and let the guy own the house as it is, not try to L/O it and all that biz.

First of all, co-signing. If you have better credit scores and a higher income, the lender will more than likely see you as the primary and switch you with the much lesser dependable borrower. To the underwriter and the lender, it doesn’t matter if you are priamry or co-signer… both of you will be responsible for payment as long as you’re on the note.

Co-signing on a mortgage is not like co-signing on your credit card. As a mortgage broker, it is our job to put the loan package together to see fit the underwriterts guiidleines.

Second, open an L.L.C. before going into business with with another of lesser credit worthiness.

Well just as another Idea,

You could buy the property just in your name and not worry about co-signing.

Get a loan that has no prepayment penalty.

Create a note via a wraparound and sell the note.

Now to do this you must have enough equity to sell the note at a discount and still pay off the original loan.

This way you are not on the line any more and you have created the win win via seller financing.