Does it Matter Who Makes the Mortgage Payment?

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October 5, 1998

"I have an 8.75% mortgage which [my current lender] refuses to refinance despite the fact that in three years time I have never missed a payment…Recently I lost my job so my father has been helping me out on my mortgage, and that’s the reason the lender gives for not refinancing, but in my opinion they just don’t want to reduce the rate… why should the lender care where the money comes from?"

The lender has good reason to care about your not having a job. That lender sold your loan in the secondary market and now is merely servicing it (collecting the payments and keeping the books) for an investor. A refinancing is a new loan, which your lender would also sell, and would be subject to the qualification requirements of investors. Needless to say, investors don’t want to buy loans made to applicants who are out of work, even those with generous fathers, since they have no commitment from the fathers. Now, if your father was prepared to be a co-borrower, that could be a different story.