Can a co-signer help me qualify for a mortgage at 3CALoan?
It’s not as easy as you may think to qualify for a mortgage loan. I mean buying a home is a huge deal! It’s one of the biggest decisions one makes in his or her life. You don’t realize the ends you must meet until you complete an application. A mortgage lender can reject your application. However, a co-signer can mitigate the frustration and help you qualify for a mortgage.
Applying for a mortgage with a cosigner can help you meet qualifications if your mortgage lender allows non-occupant co-borrowers on loans. A co-signer doesn’t necessarily have any interest in your property. Still, they can help you qualify for a loan due to their income and assets that the lender takes into consideration when the application goes through underwriting. The job of a co-signer is to strengthen your home loan application because this person is pretty much promising to pay your loan if you can’t.
More helpful information for people looking to get a co-signer
Young people who are just beginning to establish their credit usually use co-signers. Other people looking to use co-signers include people who experience financial setbacks. These setbacks include a stretch of unemployment, retiree on a limited income, and even a divorce in which the spouse ruined the couple’s credit.
Overall, if you have a bad credit, there’s only so much a co-signer can do. When two people evaluate a mortgage application, lenders will base their decision on the lowest credit score of the two. Hence, if you have a foreclosure or bankruptcy on your record, the co-signer can’t really do much to help your case. If you’re a young person trying to establish a credit history, a co-signer can make a big difference.
Candidates for co-signers
If you’re young, your parents would be optimal co-signers. They are usually willing to help their children who are just starting out. Tables turn when adult children help co-sign for their retired elder parents.
In all, it’s important that your co-signer is someone you know and trust. The purpose of being a co-signer is to not let down the actual borrower. Looking to friends or secondary relatives as co-signers isn’t too highly advised. If you default on the loan, it can ruin the relationship. You’re still tied together by the loan even if your relationship deteriorates. It can end up as a messy affair. Ultimately, if you don’t have a close relationship with a relative, you can end whatever good there is to begin with.
How co-signers can help
Co-signers can help you qualify for a mortgage if:
- They have a stronger employment history.
- You don’t have a credit history.
- They can help fix a debt-to-income problem.
As a co-signer what you should keep in mind
If the primary borrower can’t make payments, it’s up to you to pick up the slack. If the loan defaults, it shows up on your credit record as well as the primary borrower’s record. You can head off foreclosure. All you’ll have to do is sell the home to satisfy the debt. However, that may not be the case if property values fall!
If you really want to be a co-signer on a mortgage, you need to ask yourself if the primary borrower is reliable. You’ll want to know if their job is secure and if they don’t default on their loan later on. They’ll have to be able to handle money and keep up with the mortgage payments. You’ll want to make sure that the borrower gets the past-due notices. There are a number of caveats you have to make sure they are able to meet before you become their co-signer. You’ll make sure that serious problems don’t come up in the future.
If the primary borrower makes every payment on time, there will be impacts on your credit. The monthly payments count as a personal obligation of your own. Hence, these payments can reduce the amount of credit you have available for your own purposes. If the primary borrower defaults or forecloses, it affects your credit rating as well. It can limit your access to credit cards or other types of borrowing. At that point, it won’t matter if the property is disposed of.
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