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Law Offices of Ronald W. Rutz
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December 28, 1998: Credit Impact of Co-Signing; Reviewing Legal Documents

Q: I enjoyed your recent column on co-signing and shared it with my law class but would you expand a bit on the credit impact that might be suffered by the good samaritan?

A: In deciding whether to grant a loan, many lenders will count a co- signer's possible liability against him or her. It may not have much of an effect for a new car loan but could disqualify someone from obtaining a home loan. As an aside, if both a car loan and a home loan are needed, usually it is best to apply for and obtain the home loan first and then seek the car loan, since the qualification requirements are lower for the latter. If the reverse is attempted, the auto loan, along with the co-signer's other commitments, might result in a denial for that home loan. Couples actually pay off the loan on the car because having less cash on hand is more than offset by the reduction in their debt load. Thus to be able to maximize one's borrowing capacity, timing and paying attention to detail is everything, even with "good credit."

Q: Do you have any year end (year beginning) advice?

A: Everyone should review their legal documents such as Wills, Durable Powers of Attorney, and Living Wills. The personal asset list (to use by a personal representative or an agent) needs to be updated and probably expanded to include the location of documents and to identify advisors such as accountants, financial planners, brokers, etc. Double check to be certain that documents such as stocks, insurance policies, deeds, car titles, etc. are all together and in a safe place. Be sure there is a back up name on the signature card of any safety deposit box. Realistically calculate your net worth to see if additional tax planning might be needed (is your net worth above $650,000). Start incorporating the new Roth IRA into your financial plan and finally, enjoy 1999 to the fullest and have a fun journey along this new year's highway. Happy New Year!!

Q: Are your questions real or do you just make them up?

A: With only a handful of exceptions, every question you see in the column is either a direct question or a derivative of a question that was asked. Topics such as tax savings, living trusts vs. Wills, elder law issues, real estate, and "relationships" trigger a cornucopiously cacophonous chorus. In fact, it is eerie, but the same or similar questions seem to come in bunches (maybe there is something in the water).

Several readers are unhappy with me because their questions have not yet appeared in the Coloradoan. Unfortunately, with the space and time restrictions, patience is required. But please continue to respond and I will try to answer as soon as I can. Your input makes writing this column fun for me. I hope that in 1999 I can help make how our society actually functions a bit more understandable.

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