Mortgage loans and co-signers

Just one question,
I went into JPMorgan Chase to take out a mortgage, but they’re asking me for co-signers. I don't really get why, considering the property itself is worth four times the loan amount. It seems like that should be enough.

Before I bother checking with other banks—since it's already the weekend—does anyone know if this is standard practice across the board at most major institutions?
Thanks

Real estate doesn't have an intrinsic value on its own, since what's actually worth anything is just a few raised walls shaped into a box.

Yeah, it's the same deal with all the banks.
No, other banks handle things differently.

Regardless of whatever answer anyone here gives you, you're probably going to end up spending an hour Monday visiting other banks anyway.

I am NOT wishing you luck in finding a loan! 🙂

Paul Hughes4 said:Just one question,
I went into JPMorgan Chase to take out a mortgage, but they’re asking me for co-signers. I don't really get why, considering the property itself is worth four times the loan amount. It seems like that should be enough.

Before I bother checking with other banks—since it's already the weekend—does anyone know if this is standard practice across the board at most major institutions?
Thanks

They're gonna ask for co-signers if your own income doesn't meet their credit requirements. The value of the house doesn't actually prove you can pay them back; it's just one way for them to protect themselves if things go south...

It’s not just four walls standing there; the first floor is actually finished. The loan is really just to cover the interior work for the second floor, which is roughly 30% of the total property value.

The borrower qualifies for the loan on their own, but the bank is insisting on a co-signer. If that's the case, what's the point of using the property as collateral? They could just take out a standard personal loan against a guarantor instead.

You need real estate to qualify for a mortgage. If the applicant is already financially solid on their own, there’s usually a specific reason they’re bringing a co-signer into the mix—maybe it's the type of job they have, working overseas, or just how their employer views their stability... I assume they already explained to you why a co-signer is necessary for this loan?

Paul Hughes4 said:It’s not just four walls standing there; the first floor is actually finished. The loan is really just to cover the interior work for the second floor, which is roughly 30% of the total property value.

The borrower qualifies for the loan on their own, but the bank is insisting on a co-signer. If that's the case, what's the point of using the property as collateral? They could just take out a standard personal loan against a guarantor instead.

So, you're basically saying you want to borrow against 25% of the property's value, even though the work actually costs 30%. That implies you already have about 16% of the cash on hand. I guess it might be smarter to just wait and save up the remaining 84% rather than dealing with high interest rates, only to end up needing to earn that 84% plus an extra 15% anyway.

Keith Hernandez21 said:So, you're basically saying you want to borrow against 25% of the property's value, even though the work actually costs 30%. That implies you already have about 16% of the cash on hand. I guess it might be smarter to just wait and save up the remaining 84% rather than dealing with high interest rates, only to end up needing to earn that 84% plus an extra 15% anyway.

The reason is that I need the funds to finish the floor I intend to rent out. Since I live on the coast, I’m already renting out the first floor and it’s doing quite well. In my estimation, the rental income would cover the loan and leave me with some profit from the upper floor. If I just wait a few years, I suspect I'll just be losing money in the meantime, and there's no telling when I'll actually have the cash on hand.

If a bank makes that assessment, co-signers become an absolute necessity regardless of any other variables, primarily because they serve as a built-in insurance policy for the loan. If you default, the bank might grab your house just to sit on it—especially with how volatile the current housing market is—but they can go straight after a co-signer's income to get their money back immediately.

Thanks for all the input on the co-signer issue; I think I've got that sorted out, though it might not even be necessary. Now I’m facing a different headache.
The house was just finished this year and doesn't have a certificate of occupancy yet. From what I've read, getting one can take a full year, but if I want to secure a mortgage, I really need everything wrapped up by this summer. Waiting a year isn't really an option for me.

Does anyone know if there's any way to bypass the certificate of occupancy requirement when applying for a mortgage? The house is brand new and perfectly livable—it’s actually been used as a rental for a year already.

How on earth were you even able to rent out a house that doesn't have a certificate of occupancy? Like, off the books or something?

Here’s what it says for ones that actually have them:

"The Department, or the relevant governing agency, is required to conduct a technical inspection of the building within thirty, or fifteen days, from the date they receive an official request for a certificate of occupancy.

A certificate of occupancy for a building constructed—or works completed—based on the master project will be issued within eight days following the technical inspection if it is determined that:"

Just... take a look and read it. I mean, I get it, what's written on paper and how things actually work in the real world are two different stories, but, honestly, I don't know a single person who built up some vacation apartments or a house, finished everything by June, and then didn't rent it out illegally that summer. I guess.

So, yeah... I suppose that part of the bureaucracy actually functions.

You don't actually need a specific permit just to rent out a property