Can A Co-Signer Help Me Qualify For A Mortgage?

A co-signer will help you with qualifying for a mortgage or refinancing your home.

Co-signer

Co-signers are people (like your wife, mother, relative) that sign their name for the mortgage which guarantee the amount will be paid if the prime borrower cannot pay the loan. Co-signers can help you get a lower interest rate, smaller down payment, or get you more money on the loan amount than you might have gotten for yourself. Co-signers are now the norm now that we are in tight credit again as lenders have adopted new credit guidelines. The green light years of the housing bubble area are long gone.

Good For First Timers

Young people, new immigrants, and people that have not established their credit are frequent users of co-signers to help them qualify on mortgages, refinance a loan, or buying a car. Others that may want to consider using a co-signer are people who are recovering from a financial problem, or a long stretch of unemployment, or a ruined credit score by a recent divorce.

In Certain Situations

Lenders in general will base their evaluation on the lower of the two scores. So if you have a low score than the co-signer will not help you there. If you are new to the credit game and have no credit score then a lender will consider the co-signers credit score to qualify for the mortgage or other applications.

Cosigner Is Responsible

Signing your name to a mortgage as a cosigner is a huge responsibility. If the prime borrower defaults on the loan then the cosigner has to step in and take over the payments. This makes him responsible for the entire debt. The property will then be put on the market to be sold for the amount that is owed to satisfy the debt if the co-signer cannot make up the payments that the prime borrower is behind. Trying to sell a property in these hard times is not always a sure thing though. You might get stuck if you are the cosigner and your credit might be damaged.

Conclusion

If you are the cosigner you must take into consideration the traits of the primary borrower. Is he or she honest, trustworthy, and reliable? How long has he or she been working for a living? Is he in a stable environment? Why does he or she need a cosigner to begin with? You should also realize the impact on your credit if the prime borrower defaults. You might also want to agree with the prime borrower to have separate bills come to you also so you will be able to check on how he or she are doing on their payments. It is not only the prime borrower who has to put his credit on the line but yours also.

Related posts:

1. Will A Co-Signer Help Me Get A Mortgage With Bad Credit?
2. Are Mortgage Rates Substantially Higher For Bad Credit Loans?
3. Where Do I Begin My Search For Bad Credit Financing?
4. Will My Bad Credit Mortgage Rate Change If I Improve My Credit?
5. Can I Co Sign For A Mortgage Loan With Bad Credit?