Can my Mom co-sign on a mortgage before applying for Medicaid without penalty or a future lien?
Hello. I’ve been my Mom’s caregiver for 10 years. Her Parkinson’s symptoms have become extremely severe and I can unfortunately no longer be her primary caregiver. We found a great adult family home where she will privately pay for 10 months then apply for Medicaid. My mom would like to co-sign on a home loan to help me secure a home. I will be paying the monthly and also be putting forward the down payment, she is only helping me qualify for the loan since the lender needs to see 2 years of employment from me, however, they cannot consider my being a caregiver to my mom as employment, which is the only reason I can’t qualify. I do not want her to co-sign if it could interfere or penalize Medicaid eligibility, or cause a lien in the future. Is it true as long as she’s not on the title or deed, and solely a co-signer, Medicaid cannot consider the home as her asset or a gift?
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Igloo, I think only if house is her main residence? Any property or homes she has elsewhere have to be sold for her care?
- so exactly where are the 2 of you living now? And who is paying the costs for where you live currently? Im asking this to try to figure out if somehow you could be ok to stay where you two are right now with the plan to be you get the caregiver exemption (to Estate Recovery) should mom own her home and now has her care plan to the point she need to be in a NH/ SNF (so she files for LTC Medicaid); or that you continue to live in the apt, if that’s where you are now?
- on the co-signing, I’d be super concerned that somewhere on the many documents on this home purchase (Act of Sale, actual title, title insurance paperwork, mortgage documents / mo mortgage statement, homeowners policy, tax assessor document, etc.), your moms name will be placed. Her creditworthiness is being used for the purchase and I think her name will be attached onto a document. & a document that gets filed at the courthouse. If that’s happens, it would probably be considered that she has an equity interest in the home. Even equity if she is not paying the mortgage or any of the costs on the property. So it would be an asset for her.
Now LTC Medicaid allows for her to continue to own a homestead as a nonexempt asset for her lifetime. But there will be a required attempt by the State to recoup costs paid for her by LTC Medicaid from her after death assets of her Estate. And that house would be an after death asset. If this happens, it will be challenging to deal with. It imho can be done but you need to be ok on risk (that this could be lurking) and you have the wallet to be able to pay all property costs for possibly years without an issue and any after death legal should it be necessary. So how do you feel about risk and what’s realistically your financial future like?
When you have spoken with lenders, has any of them brought up “age”.
It’s a real grey area for lending as technically they have to be careful not to be drawn into age discrimination. But what they can do is base the type of lending they will do on the actuarial tables on you and your mom (this besides creditworthiness). Most mortgages are 30 years but if folks are older so that their probabilities are they won’t be alive in 30 years, the lender may not do a 30 year but might do a 20 year or move it to a conventional loan rather than an FHA with it’s low 3-5% down. The conventional will need significantly higher downpayment, like 20% -30%. Just try to make sure your lender is 100% solid or the terms you are expecting and not be one to do a switcheroo.
As to the question of legalities and future consequences, I don't THINK that she faces consequences if she isn't on the deed. BUT.............really in the case of legal questions you cannot afford to be wrong. You should check with an attorney regarding the rules in your state. Remember, we are a Forum of strangers, and while we all have opinions, that doesn't make them right.
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I agree with freqflyer that the ability to cosign a loan usually requires someone to have financial resources to withstand taking over payments should you become unable to do so. Banks lend money to people who don't need it, because they don't like risk. Your Mom is a very high risk since she only has 10 months worth of funds and then (hopefully) will qualify for Medicaid.
Hypothetically if she did help you secure a house, would you then be able to afford the taxes, insurance, utilities, maintenance, and repairs? When you own a home you never stop spending money on it -- and sometimes those expenses are total surprises. My son, who purchased an older home, had to replace his AC within the first few months, and then had a $3K plumbing bill recently after only owning this place for 2 years so far. If you had a home with your current income, you'd be "house rich" and "cash poor".
As for being a co-signer for a mortgage but not placed on the deed, no it probably will not affect your Mom when she signs up for Medicaid but check with your State Medicaid office to verify that, as each State has their own rules and regulations.