Can’t Identify with that Scenario?
You’ll want to find a co-signer who’s not only willing but also able to meet the bank’s financial criteria. When evaluating the co-signer’s creditworthiness, your lender may also factor in the debt of the new mortgage as well as housing costs like taxes, homeowner’s insurance (visit the following web page) and maintenance fees — even if the agreement between you and the co-signer is that he or she won’t be living in the property or paying the mortgage. He or she must be the age of majority; in the United States, that’s 18. The bank will look at factors that influence the co-signer’s ability to pay, such as his or her income, other debts and assets, credit history and credit score.
Mortgage co-signing is when you and another person jointly apply for and carry a primary or even a second mortgage. It involves entering into a long-term, legally binding agreement with the co-borrower, the bank and other entities, like the local government where the property is located. Some people advise never co-signing a mortgage for a number of reasons, which we’ll explore in this article. Yet, others stand behind the notion of co-signing because it provides additional options in buying or refinancing a residential property. Going in together on a house may seem simple, but typically, it’s rather complicated.
As we discovered earlier, there are mixed opinions on the concept of mortgage co-signing. Although there are advantages — mostly to the primary borrower — of co-signing, things can go wrong and create more than an inconvenience for either or both people. Weighing the pros and cons of co-signing before you ever put your signature on that first mortgage document will help you make the best decision for your lifestyle and financial future.
He asks you a few questions, and within minutes, you’re feeling completely deflated. You may have heard the term “co-signing,” and you may have even done it already at some point in your life, like when you and your roommates rented an apartment. Can’t identify with that scenario? How about this one: You get a phone call from a good friend, and he asks you to co-sign a loan to help him buy a house. It seems that with your financial history, the only way you’ll qualify for a mortgage is to get a co-signer.
Obviously, if you’re married, your spouse will likely co-sign on the dotted line to purchase your dream home or investment property. You want someone you trust and who trusts you. If you’re single, it makes sense that a parent, family member or domestic partner be potential co-signers. Draw up an enforceable contract between you and the co-signer, specifying rights and responsibilities, such as who will be occupying and maintaining the property and who will be paying the bills. It helps to establish this trust in writing. As we learned earlier, co-signing a mortgage can get rather hairy.
Whether you’re the one buying a house or the one co-signing for someone else, once there’s a contract on the home, you and the co-signer will complete an official application form for the mortgage, sign it and give it to the mortgage broker or loan officer, along with other documents, like authorization to verify your employment, income and credit history. But the process is far from over at this point. Lenders will do their due diligence and continuously verify your income, debts, assets and other factors that will impact your ability to pay the mortgage until the very hour you close the deal on the property. That bank representative will ask you a slew of questions, and he or she may contact you a number of times with questions up until the property purchase or settlement date.
