There are those times when a little help is needed in accomplishing things, and this includes home buying and mortgage application. Co signing someone's loan is a very big responsibility primarily because of the risk that things can go the wrong way. Here are some of the things that you should know in using or being a co signer in a mortgage:
What Are The Responsibilities Of Co Signers?
When a person co signs someone's loan, that means that they are putting their name and credit at risk just so the mortgage lender gets security in giving someone a loan. If the actual borrower misses payments, the co signer can be asked to pay for the missed payments. Also, these late payments will show up in the co signer's credit record.
Since involving a co signer in a loan has big effects on both person's credit, it is very important that these two people have high levels of comfort with each other. Meaning, their relationship level should be tight enough to ensure that they are both certain on the financial step that they are taking.
Non Occupant Co Signers
If you are looking to get a home loan and you have found someone who will help you out in getting approved, you should know that even though this is extremely possible, there are also restrictions that apply to this mortgage step.
The possibility of getting a mortgage with a co signer depends on the loan type you are applying for. Typically, co signers are commonly used in conventional loans and some types of government loans.
When a co borrower won't be an occupant of the home, he/she must sign the loan but his/her name will not be needed on the property's title. The co signer's credit record will be checked and his/her score will be considered alongside the applicant's own score to determine how qualified the applicant is for the loan.
