Co-Signing A Mortgage Loan : Instructions, Plus Tips To Protect Borrowers And Co-Borrowers

Mike Cox
Mike Cox
The Mortgage Reports Contributor
June 20, 2016 - 2 min read

Buying a home with a co-signer? Trying to with a co-signer already on it? You’ll want to watch this video first.

Co-signing can help a person get approved for a mortgage to purchase a home, but it’s not without its danger zones.

Learn more about co-signing, and get access to today’s current mortgage rates.


Cosigning A Mortgage: Transcription

Today we’re going to talk about cosigning. It’s really not all that bad, but just like anything, there are their ups and their downs.

First of all, a cosigner with good credit does not cancel out a borrower’s bad credit. Lenders use the credit of the main borrower to qualify. They’re not going to go with the credit of the cosigner. Bad credit plus great credit does not equal average credit.

While the cosigner can’t improve the credit score that’s looked at to price or qualify for the loan, the cosigner’s income will be added to the borrower’s income in deciding the size of the loan in which they’ll actually qualify.

Some cosigners, they’re left to wallow when the borrower stops paying. The big mistake is when you sign for someone who isn’t responsible. Here’s where you need to learn to say the word, “No.”

It’s that easy, watch—no!

It’s your financial security that’s at risk here, so make sure you know the person is reliable enough to take that responsibility. If not, you know what to do. Ready—no!

The lender is not going to care that your deadbeat brother stopped paying, they want their money to come from somewhere and it’s all you at that point.

My advice to you before you cosign for someone, is to make sure you can really trust that person. Don’t let the guilt of refusing to cosign eat you up, you’ll be way more upset if you cosign for a person and they destroy your credit. If you really, really need to cosign, I suggest you have the borrower pay you and have the mortgage payment come out of your account each and every month.

This way you’ll know of any payment issues before it affects your credit.

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