Real Estate the Ramsey Way - This Is Why You NEVER Co-Sign for a House

Episode Date: August 11, 2025

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Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate homeownership with confidence. All right, Nick is with us in St. Louis. Hi, Nick. How are you? Good. How are you guys? Better than we deserve. What's up? So my question is, can or is it a good idea to have my boss co-sign for a house for me?

Ooh. How long have you been listening to this show, Nick? Like three months. Okay. What are your thoughts on the matter? I mean, I trust him. I just don't know. There's a lot of, there's a lot that goes into it.

So, I mean, do you guys want the full details? They're strength attached, is what I could say. Well, what are the strings? So he has, this is his friend's house currently. They are moving. so he wants somebody and he currently rents their garage because he loves exotic vehicles and he's got lifts and all kinds of stuff in their garage so he rents their space in the garage so he wants to do that with us so he wants to pay when we did the numbers it would be about half

the mortgage to rent our garage space so he can put his vehicles in there but we know that we can't get that big of a loan so he would have to co-sign for us How long you work there, hon? A little over a year that I've known him for about three years. And you're 25? I am 23. Oh, okay. And you've been looking at houses a lot.

Y'all really, really want a house bad, don't you? Well, I currently, I'm in one now. You own a home now? Yes. You and your fiancé own a home? Yes. Together? Yes.

I know. When are you getting married? I know. next November. Okay. So let's play this out. So you explained what the perfect world situation is. Let me just throw out some ideas.

What would happen? Let's say he co-signs with you. You guys do this deal. He pays half the mortgage. What happens if he decides he doesn't want to pay anymore? What happens if you get fired from your job? He decides he doesn't want to pay anymore. What would happen?

Because you said that you can't afford it on your own. Yeah, I mean, we would have to pretty much sell it. Mm-hmm. And what happens if... Yeah. And is it worth that? I mean, we could afford a couple of months, but it's way bigger. I mean, it's twice the size of what we live in now.

So is that what would... So that's what it is. It's this giant house. Because I'm trying to, what I'm on my side, I'm trying to think, what would cause you to put yourself in such a precarious situation? Because he's able to get something that there's no other way to. could get. Yeah. Yeah. I mean, it's, we live in, it's not a house. We live in like a townhouse, but we do own it. So we're kind of in a complex. So there's a lot of people. We don't have our own yard.

We have a dog. We love for him to like it's in the back. You're 23. You're 23. You're just getting started. Yeah. There's nothing wrong with that. So, okay, here's the answer to your question. And then I will also tell you why. Okay. Never. do a cosign deal under any circumstances ever okay and the reason is is that you're signing up for a deal that you know and that the bank knows doesn't work unless everything goes perfectly and honey 100% of the time things don't go perfectly yeah let me tell you as soon as you close on the house the competitor calls you up and offers you $10,000 more a year to change jobs, and you can't take the job because you feel loyal to the guy who has cars in your garage.

And if you do take the job, he sues you because he thought you were going to stay with him forever. He thought you were going to stay with him. He thought he had bought a slave. He didn't think he did co-signing. So never do a co-sign deal. There's not a single circumstance on the planet that this is a good idea, and yours is particularly bad because there's about nine million things that can go wrong and only one that can go right. The probability of this being a good idea 10 years from now is very close to zero. You're going to get screwed.

You're going to be stressed. You're going to make wrong decisions for the wrong reasons because you're painted yourself into the corner and you're going to get pain on your feet. Please don't do this deal. He's trying to be helpful. He's not a bad guy. He's trying to be helpful. And you're trying to do a nice thing for your fiancee soon-to-be wife. And you, with good reason, want a nice place. I don't blame you for any of that. But you're trying to do a good thing, a bad way, and it's going to bite you in the butt. Does any of that make sense? Yeah. No, it makes perfect sense. We've been contemplating it. It sounded great on paper, but there were so many things that could go wrong so quickly.

The likelihood of you still working there 10 years from today, on average is zero, period, for no reason at all. Other than you get a better job, he goes broke, he gets mad and fires you, whatever. I mean, it just doesn't. The number of people that stay on a job 10 years, we celebrate 10-year Ramseyversaries, people that have been here 10 years. And, you know, the number of people that are here three years or four years or five years or six years, there's a lot of them. But the number of people here 10 years, not that much. The number of people here 20 years, almost none. This doesn't go well.

This doesn't end well. And by the way, you know, when you buy a house that's double the size, it's not just double the mortgage. It's double the problems and the things that you have to take care of with the property. Oh, crap, yes. You know what I'm saying? It's not just the mortgage. Double the roof that's going to leak. Yes.

That's real. Hey, guys, thanks for listening to Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house. It's exciting, and one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced agent who will rush you into costly mistakes, like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents.

These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solutions.com slash trusted agent. That's Ramsey Solutions.com slash trusted agent. Let's go to Gene in Denver. Hi, Gene. Welcome to the show. Hi, I'm so glad you took my call. My question is, I'm a landlord and my renter, the tenant, they called me Friday night, and they told me that they had a repair done on the air conditioner. And here's the invoice.

And I said, did you pay for it? And she said, yes. And I said, well, why didn't you call me? She said, well, I just took care of it. Now, this renter has been a long time renter. She's been there six years already, and she'll be there another 10 years. They're just a good quality tenants. They keep the house immaculate.

They, the yard immaculate, everything, so I don't want to lose them. But she's expected me to pay this $1,000 bill that was not authorized. In my lease, it does say that any unauthorized repairs are the responsibility of the payment, unless it's authorized by me and no exceptions. My question is, I don't know how to handle this. if I should pay all of it, a portion of it. Has she done this before? You know, I don't want to lose them.

She's always called me. Okay. Yeah, she's always called me in the past. Was she in a pinch or something? Did she give you a reason why she didn't call you since the pattern before was different? Yeah, it was like the AC out and it was 90 degrees, like something like that? No. No, it's not even really hot.

Mm-hmm. But she had it. Okay. She's never done it in the past. Sure. How much would it have been? If she had called you, do you have any idea of what it would have been? Like, would you have done something different or called a different company?

Would there have been a different route you would have taken as a landlord? I would have called my own, you know, H. You know, air-conditioned man. Yeah. She was somebody else. Okay. Do you have the money to cover it, Jean? I'm just curious where you are financially.

Yes, I do. You do. Okay. You know, since she's been with you for six years and will continue, and it's $1,000, you have the money to do it. It had to be fixed anyways. Maybe you could have gotten it $200 cheaper or something, but you would have had to fix it as a landlord anyways.

I probably would just pay it, but I would tell her going forward, communicate it, that if she makes any other repairs to the home, it will be on her dime unless it goes through you. Like, I would re-communicate that to her. And the reason I'm probably being a little lenie is you said she's been great and she's never done this before. You know what I mean?

So she could have just been in a pinch. I mean, who knows why. And it wasn't like she went and, I don't know, bought some crazy new thing for the house. That's right. You know what I mean? It was a pretty standard maintenance item. So yeah, so I would probably pay it, Gene, but I would reiterate with her, hey, going forward, any maintenance that is done. And you can even show the contract if you want.

And just say, I just want to be clear about this, like going forward because you guys have been great. I appreciate, you know, how well you take care of the property. but going forward it's going to be that or I'll have to just charge you personally because I want to be able to run the numbers and put out the companies I want to make sure it's the service on the home that I want. So $1,000 I'd probably just pay it. Yeah, I would too.