Finding the right mortgage co-signer can be a dream come true when all you require is a little boost to qualify for the loan amount needed to get you into your new home.
If you’re having a tough time meeting traditional lender mortgage guidelines thanks to a life event such as divorce, illness or job loss – or insufficient credit or income – having someone co-sign your mortgage application may be the perfect solution.
It’s important to keep affordability in mind at all times, however, as a co-signer shouldn’t be used if you won’t be able to make your monthly payments on your own.
Consider a co-signer who compliments what you’re currently lacking in the eyes of your lender. If you have poor credit, for instance, you’ll want to find a co-signer who has healthy credit. Or, if your income is preventing you from qualifying on your own, the foundation of your ideal co-signer will be based on their strong income.
The most commonly used co-signors are parents or close relatives. It’s also possible to have more than one person co-sign a mortgage. But, regardless of who you use, your lender must be convinced that this extra help from your co-signer(s) will lessen the risk associated with repaying your loan.
How does having a cosigner on a mortgage work?
Co-signing agreements can be arranged a couple different ways. First, the co-signer can become a co-borrower.In this instance, the co-borrower fills a similar role to that of a partner/spouse who’s buying the home with the primary applicant. Essentially, you’re adding the support of another person’s credit history and/or income to the application. He/she is placed on title for the home and the lender considers this person equally responsible for the debt should you stop paying the mortgage.
A second scenario involves a co-signer who becomes a guarantor. The guarantor is backing the loan and promising that you’ll pay it back on time. As a result, the guarantor becomes responsible for the loan if it goes into default.
Have questions about who can co-sign a mortgage and how the process will work best for your needs? Answers are just a call or email away!