As a co-signer, you are a co-borrower. All (or at least most) of the items requested are typical in a mortgage application for the borrower (and therefore for you as a co-borrower).

Thanks, that's what I expected. One practical problem is that they want our 2020 and 2019 tax returns, and we have only paper copies, 50 pages each, which would have to be scanned. Could we get by with just the 1040 forms, and, perhaps, the state equivalent?

I would submit the 1040s and then wait to see if they ask for more of the tax form.

I personally would not be keen on co-signing for a mortgage. It commits you to and ties you down to having another mortgage which might interfere with your future plans. It there perhaps another way you could help her out? Does she really need a co signer? Or perhaps a plan to refi at a later date without you.

I agree with the comment that being a "co-signer" really means being a co-borrower. There's no halfway house. So, the second party is also applying for a loan and also has to submit the same litany of information.

mtvhike, if you had a professional preparer do your returns, they should be able to give you a digital copy in a PDF file.

As to whether being a co-signer on a mortgage affects an individual's financial picture as seen by others, including prospective lenders at a future date, well yes, of course it does. So too would be making a gift to cover a down payment. How could it be otherwise?

It's probably been a while since you have had to do a mortgage application. It's become pretty invasive. The list of items is not out of line for today's applications.

Yes, just send them the two pages of your tax form. You don't need to send the work sheets or any of the other schedules unless they ask for them.

Invasive? I don't think so.

Several times in my lifetime, lending crises and home market values crashes have been caused by lax lending practices and inadequate regulation of lenders. Rules and procedures were tightened to give better stability to the system. That's what's now in place to reduce lending errors.

As for me, I applied for a loan (a re-fi) about 12 months ago. Because of mostly digital record keeping, I was able to pull together the items on their request list and upload them in about 30 minutes. I found nothing time consuming, invasive or offensive to provide what was requested nor about follow up questions asked. It was what they needed to do what I asked of them. Loans are based on some semblance of financial due diligence, not just on someone's request.

I was going to say much the same things everyone else has mostly said. Nothing they've asked you for seems much different than what I had to provide.

I bought a beach house a few months ago. Interest rates are so low I chose to get a mortgage rather than pay cash. I'm old (ha!) and have been reasonably well employed for many years, so have nice cash reserves built up in anticipation of retiring soon. However the fact I could pay for the place in cash had no bearing on the application process.

Forget thinking of yourself as "just" a cosigner. Think of yourself as someone who is a co-buyer, because that's more accurate. You are just as on the hook for the payments and the resulting debt as she is, which means they're going to do the same due diligence on you as they do on her.

I think I was able to upload everything within about an hour. The largest hurdle was getting a good clean pdf of my spouse's driver's license - those things don't want to copy legibly! :)

OP--one comment, since you and your husband are co-borrowers on the mortgage, please do yourselves a favor and make sure your names are also on the title.

Although I'm sure your step-daughter is responsible, please understand that if she defaults on the loan, you and your husband are responsible for all payments, taxes, insurance, etc.

So we're just going to ignore that her employer switched her to an independent contractor but it's still the same job? And she's not challenging it? Did her employer terminate her as a W-2 employee and then rehire her as a 1099 contractor? An employer cannot simply switch an employee to a contractor without cause, reason and support. But we're going to worry about the mortgage although now your step daughter is responsible for all her own payroll taxes and expenses. I question all y'all's financial literacy.

"An employer cannot simply switch an employee to a contractor"

Sure they can.

Yes get yourselves on the deed as well. You can quitclaim it when she refinances.

Nothing but trouble for coborrowers who dont actually have claim to the property.

If the OP is on the deed and then quit claims in favor of the stepdaughter when the daughter refinances in a couple of years, does this trigger a gift tax return when the time comes? That is, would the parents be legally considered to e giving half the house as a gift to the daughter?

This is all moot now; she made a full asking priced offer of 825k$ with 525k$ down, and was beaten out by an all-cash buyer.

To Jan, it's not that her employer switched her to an independent contractor, but that they closed entirely and let her use their client list. She's actually doing quite well, it's just that she needs 2 years of income tax statements to qualify for the mortgage.

"This is all moot now; she made a full asking priced offer of 825k$ with 525k$ down, and was beaten out by an all-cash buyer."

I think I have maybe a terminology suggestion to make. Unless a seller is helping to finance a purchase ( granting and holding a loan to the buyer for a portion of the purchase price), nearly every sale is an "all-cash" deal. No matter what the source of a buyer's funds, the seller walks away with cash equal to the selling price less expenses.

I suspect what was meant was that the accepted deal was a purchase offer with no loan contingency. This is something a prospective buyer can minimize the disruption of by getting a loan preapproved from a lender before going real estate shopping. Waiting until after an offer is submitted to try to sort out what might be viewed by lenders as complications in one's personal situation is way too late.

Housing prices are very inflated right now. If this is her first home purchase, perhaps she should rent for a couple more years as she's establishing her proof of income.

Elmer, I understand that - she did have a loan approval but with RE being so hot right now, an all cash offer with no loan contingency. And Kristin, she needs a large place in a different school district NOW. She has found a couple of other houses which are smaller and in a different neighborhood, but still the same school district, so we'll see what happens.

"Housing prices are very inflated right now."

To say prices are inflated is to suggest price decreases are inevitable. If instead today's prices are just one data point in a market of ever-increasing values, which is the case in many areas, to wait means to face even higher prices later.

I am sorry to hear that your daughter lost out on the house.

It may (or may not) help in the future for her employment account to be:

I was working for Company XYZ that closed ## months ago. I have taken over the clients from that company as an independent contractor and am doing quite successfully.

Which is the truth. Her company did not "convert" your daughter to a 1099. Her company closed and, being a bright, confident person, she has made the loss of employment into a success story. She should be proud, and should tell the story that way. It may help with future mortgage underwriters, especially if she can get manual underwriting.

Update, and a few additional questions:

Two days ago, we got a call from our daughter that she was making an offer on another house, less expensive, and so we need to "Docusign" the equivalent documents we had signed for the earlier house. Time was of the essence because the seller's realtor scheduled an open house for today and she wanted to get the offer in quickly. Last night, she called in with a revised document from the seller's realtor delaying the proposed closing date by 7 days so that the realtor could cancel the open house, so I guess the offer was in principle accepted (although not signed by the seller). That's good news.

However, during our conversation, a couple of issues came up:

1. She does not have her own attorney (and neither do we in Illinois), saying that her Buyer's Realtor is acting as such. I said that that realtor is acting in the interest of the seller, and she should get her own. In this case, both agents (buyer's and seller's) are working for the same agency!

2. I asked here if there is a walk-through scheduled for the day before closing (which is in about 56 days), and she said "no", so I asked here to arrange that with the agents.

3. She wants to make some major changes in the house before she moves in, including adding central air conditioning (it currently has 3 window ACs), and adding a fence/gate so the back yard is protected for their Austic daughter.

4. There is an issue with the property boundary: there is a fence which is owned by their next door neighbor which is partly on their property. I assume that will come up during the title search. Looking on Zillow, that neighbor's property was "recently sold", so the fence was probably put up previous neighbors.

https://www.zillow.com/homedetails/460-Hawthorn-Ln-Winnetka-IL-60093/3363790_zpid/

Interestingly, this house is no longer listed for sale on Zillow (it was last night).

"She does not have her own attorney (and neither do we in Illinois), saying that her Buyer's Realtor is acting as such"

A purchase offer isn't legally accepted until signed.

Attorneys are not involved in property sales in many states. Including in mine, a large and populous one. Escrow companies fulfill the role handled by attorneys elsewhere. Realtors don't act as attorneys, they act as realtors.

Standard contracts, legally required disclosures, steps and actions conducted during escrow are followed and are resolved by customary and or negotiated conduct. Forms are all pre-printed. The only circumstances requiring an attorney are if the escrow starts to go sideways, problems are encountered that can't be negotiated by the parties (good realtors can be especially useful in breaking logjams, they don't want to lose their commissions), or there are actions in bad faith or contradicting contractual requirements by either party, among other things. These are rare in residential transactions, though the boundary uncertainty may be one such circumstance.

In Illinois, attorneys are usually used for property sales. I am amazed that a purchase offer was even accepted without an attorney's name listed. Perhaps she meant that the attorney of record was the one typically used by this agent. My agent has a favorite attorney that he has worked with for many years and her office seems to be very good.

Do both the buyer and the seller engage their own separate attorneys? What legal services are rendered?

Based on a marketing letter I just received from a real estate lawyer, he does
Contract review
Handling of all contract negotiations through closing
Help to resolve issues regarding the inspection
Ordering title insurance and survey and assist in obtaining city transfer stamps
Resolution of any title issues
Prepare final closing figures and forward to title closer
Prepare of all closing documents
Scheduling and attending closing

My lawyer actually handles all title work and closing processes in house rather than using a title company. This eliminates one possible source of miscommunication and opportunity for documents to go missing. Most lawyers charge between $400 and $600 for a transaction, in addition to the title insurance and settlement fees.

Each party has their own lawyer. For a for sale by owner transaction, I inquired about the possibility of using one lawyer and splitting the fee but the lawyer said that would be conflict of interest.

My recent experience is that for the sale of my house in NY State, I needed an attorney, who's fee was $1600.

I've bought and sold several houses in NYS. You need an attorney to close a real estate transaction here in NY - and each party needs their own.

FWIW, it's the same way in Delaware.

Those are the only 2 states where I've ever bought or sold, so that's the sum of my knowledge on the matter.

3. She wants to make some major changes in the house before she moves in, including adding central air conditioning (it currently has 3 window ACs), and adding a fence/gate so the back yard is protected for their Austic daughter.

Is she planning on moving in next year? Because trying to schedule these items to be completed within the next 60 days will be near impossible in this busy market and if the seller does manage to secure a contractor and materials, they may be of questionable quality if they are readily available. You may want to opt for a credit instead.

Interesting, Lyndee Lee. Most of what I see on that list is pretty non-substantive. And since many of those tasks are done by realtors and escrow companies (without lawyers) elsewhere, I expect these services require much legal expertise to accomplish. I also suspect a practice with a heavy emphasis on property conveyance wouldn't be held in high esteem by other lawyers.

The fee I paid 3 years ago to an escrow company for a home purchase was just a bit more than the amount mtvhike cites. My transaction was in an area with a lot of real estate activity and everything went smoothly. As far as miscommunications and procedural gaffs are concerned, that's the reason to rely on the service providers recommended by one's realtor.

Different ways to do the same thing, both work.

For people not using an attorney, do the contracts in your area not include an ”attorney review” period?

We’ve bought and sold a few times in IL and have always used an attorney, who handled all negotiations + the title search.

Lisette Mauch, in most areas of the country, an attorney is rarely involved in anything other than conducting the closing. Agents use boilerplate forms to exchange offers and title searches are conducted by title abstractors. The gap after inspections prior to closing is caused by the lender getting their act together, the appraisal and the title search. Thus, there is no need for an attorney review period.

"For people not using an attorney, do the contracts in your area not include an ”attorney review” period?"

I don't think this is typical in my "no attorney needed for conveyance" state. An offer or a reply to an offer can contain any contingency the person wanting such provision can dream up. Whether it's accepted by the other side is another story. Preprinted forms and provisions considered "customary" in the area are the lubricants that makes deals more cookie cutter than not. Extra requirements and non-customary contingencies can always be asked for but as before, whether or not accepted is a different story.

Clean deals with customary terms are most likely to get accepted as is. Others not like this can be expected to receive a counter-offer with the unconventional terms removed. .

As before, other than very big or complicated transactions or troubled circumstances, attorneys are not normally involved. Real, full fledged real estate attorneys do substantive, big dollar advising and litigating work as do their peers in other legal specialties. By contrast, lawyers who do conventional property conveyances are not their profession's best and brightest because they work for peanuts (relatively speaking) and the work is not that demanding.