‘Co-Signing: It’s Only There Because the Bank Knows That Person Cannot Pay’: Ramsey Show to Wife Whose In-Laws Are Destroying Her Husband’s Credit

“For anybody listening, co-signing: it’s only there because the bank knows that person cannot pay. They will not pay, they cannot afford it, and they don’t want to take the risk. So neither should you.”

Ramsey Show co-host Jade Warshaw ended a call with that warning on the October 2, 2026 episode. The caller was Brooklyn from Phoenix. She co-signed her in-laws’ mortgage during a housing crunch. The in-laws have since missed several payments, and those missed payments set off wage garnishment notices. They won’t sell and they won’t refinance. Her husband’s credit is taking the hit.

When you co-sign, you owe the whole debt and every late payment shows up on your credit report. The full balance also counts against you when you apply for your own car loan or mortgage. The in-laws’ housing bill runs about $2,000 a month: $1,700 for the mortgage and $315 in HOA dues. That adds up to roughly $24,000 a year tied to her husband’s name.

Warshaw Is Right, and October’s Rate Spike Proves It

Warshaw’s judgment holds up. A lender requires for a co-signer when the borrower’s income or credit falls short of its standards. The Consumer Financial Protection Bureau points to research. It shows that mortgages with a co-borrower have lower default rates than mortgages with a single borrower. That second signature works like insurance for the bank, and the co-signer is the one taking the risk.

The common way off a co-signed loan is for the borrower to refinance it into their name alone. That door just got harder. According to Freddie Mac, the 30-year fixed mortgage average hit 7.28% on October 1, 2026.

It had been 5.98% as recently as February 26. It is also up 0.98 point year over year.

That works out like this on a sample $300,000 balance. Principal and interest come to about $1,795 a month at the February rate and about $2,053 at today’s.

That’s roughly $258 more each month, or about $3,094 a year. Someone who already can’t make the current payment can’t handle a bigger one.

Brooklyn also said her in-laws can’t refinance her off the loan because their credit is too damaged. Each missed payment makes approval less likely, and higher rates make any new loan cost more, so Warshaw and co-host Dr. John Delony told her the only realistic way out is a sale. The in-laws “flat out will not” agree to one.

One Question Decides How a Co-Signed Loan Ends

How a co-signed loan ends depends on whether the borrower could qualify for it alone, and if they could, your signature was a convenience. A refinance can release you later at a payment they can afford.

If they couldn’t, the bank approved the loan because of you. You stay on it until the house sells or the balance hits zero. Each missed month leaves your household two options. You can pay their bill with your own cash, or you can let the late payment hit your credit report.

Brooklyn has some room. Her own mortgage takes just 24% of take-home pay, so covering an occasional missed month is painful but possible. A co-signer with a tighter budget would face that $2,000 question every month with no buffer.

Four Moves to Make If You’ve Already Signed

1. Keep one full payment set aside. Warshaw told Brooklyn to keep $2,000 in a “peaks and valleys” account to cover a missed payment and refill it afterward. Covering one month yourself costs less than a 30-day late mark, which can stay on your credit report for up to seven years and affect every loan you apply for.
2. Check your own credit instead of relying on the borrower to tell you. Pull your reports at AnnualCreditReport.com and turn on alerts. That way you hear about a late payment within days, before collection letters arrive.
3. Figure out the refinance payment the borrower would face today. Plug the current balance into any mortgage calculator at 7.28%. If the result is higher than the payment they’re already missing, refinancing won’t happen. Your negotiation should then be about selling the house.
4. Call a HUD-approved housing counselor, which is free of charge. If the loan is FHA-insured, the servicer must review hardship options. These include forbearance or a loan modification that extends the term to 30 or 40 years. A partial claim moves the missed payments into a zero-interest lien. Any of these can stop the damage to your credit.

Before you co-sign anything, plan as if you will make every payment yourself for the life of the loan. The bank is counting on exactly that.

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