Adding a borrower to a cash out refinance loan and the possible tax implications...

[MrNoName]

Washington State

Backstory -
My parents are looking to do a cash out refinance on their apartment complex. They need to have a co-signer/borrower in order to get the amount that they want. Is it possible to add myself to the cash out refinance loan as a debtor to assist in the lending?

Follow-up Question -
After 5 years or so, if the lender deems my parents credit worthy to maintain their loan on their own (sans myself), can both parties come to an agreement to remove my name as a co-borrower/signer? Conversely, if my parents are not deemed to be able to manage the loan on their own, and I am (and both parties agree), can they be removed from the loan?

Lastly -
If either party is removed from the loan after 5-7 years, are there any tax implications from the cash out refinance part of the loan?

Thank you,

 

[justalayman]

Unless the lender agrees nobody is being removed from the loan.

Whether the lender will accept you as a co-debtor is up to the lender.

No idea why you would want to consider removing your parents from
The loan is beyond me. Why would you want to take on 100% of
The debt while having no ownership interest in the property?

 

[MrNoName]

I guess I answered my own question - the term I was looking for was 'Quit Claim' with possible refinance.

 

[adjusterjack]

My parents are looking to do a cash out refinance on their apartment complex. They need to have a co-signer/borrower in order to get the amount that they want. Is it possible to add myself to the cash out refinance loan as a debtor to assist in the lending?

Sure, it's possible. The lender would be happy to have a third fish on the hook. But all you would be doing is guaranteeing to pay the loan if your parents can't. If they need a co-signer to get the loan there is a reason that the bank won't lend it to them without one and, trust me, you are NOT smarter than the bank. Co-signers are never smarter than the bank and are the ones that end up holding the bag when the primary borrowers default.

After 5 years or so, if the lender deems my parents credit worthy to maintain their loan on their own (sans myself), can both parties come to an agreement to remove my name as a co-borrower/signer? Conversely, if my parents are not deemed to be able to manage the loan on their own, and I am (and both parties agree), can they be removed from the loan?

That is NOT how loans work. That is NEVER how loans work. Anybody telling you that is LYING to you.

The ONLY way a co-signer gets "removed" from a loan is if the borrowers take out a new loan in their own names which means they have to qualify from scratch.

No lender ever lets one of the fish off the hook while the loan contract still has years to run.