Personal loan and qualifying for Mortgage

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Posted by: myra Aug 6 2004, 07:46 AM
hello, i need an advice from anyone…….my mother inlaw wants my husband to get a loan in his name for $25,000, is that going to hurt us because we are planning to by a house…but the loan is going to be for his mother…
Posted by: Rick Aug 6 2004, 08:52 AM
Whether or not it will ‘hurt’ you depends on a number of factors, such as income, gross and debt service ratios, etc. That being said, even though the loan proceeds are intended to go to your mother-in-law, your husband (or whoever has their name on the note) will be on the hook for the loan. You should really question why your MIL cannot get the loan on her own. If it is because she has poor credit due to missed / late payments, bankruptcy, or similiar, are you prepared to stick your neck out for her?
Posted by: loanuniverse Aug 6 2004, 09:49 PM

I think it will depend on whether or not the loan still has a balance by the time you apply for the mortgage loan.

I would think that if it does, it will hurt anywhere from a little to a lot as this debt service will need to be calculated to see if the two of you qualifies for the house.

On the other hand, if the loan gets repaid prior to applying, it might actually help as it will be another good credit in his report. {of course payments need to be made in a timely manner}.

As Rick mentioned, your husband and by extension the two of you are taking a risk.

Good luck
Author: Commercial Loan Underwriter