Co-signing Mortgages – Things The Primary Borrower Needs To Know
When homes seem less and less affordable, home buyers are on the lookout for a way to be able to afford them. Co-signing a mortgage is one of the ways through which you can afford an unaffordable home.
Co-signing a mortgage explained
Co-signing a mortgage simply means having more borrowers than one. The co-signer takes the responsibility of paying up a mortgage if the primary borrower fails to make his mortgage payments. Co-signing for a mortgage is quite risky and usually family members co-sign to take care of each other in case of a financial urgency.
Why would you need a co-signed mortgage?
You could need someone to co-sign your mortgage in two events: one, if you are a youngster, fresh out of college, with a poor credit history, and two, an employment history which is not long. Another instance could be that of a borrower who has had a bad record on paying back their loans. A few other reasons that you may need a co-signed mortgage could be un-affordability due to high prices of homes, lending terms which are stringent etc. In these cases the co-signer adds a financial surety to the mortgage application helping the primary borrower to qualify for the loan.
What is in store for the primary borrower of a co-signed mortgage?
If you are in the borrowing market looking to purchase a home and have reasons for which you are unable to get a mortgage, you must think about your overall financial position before bringing on-board a co-signer for your mortgage. You need to ask yourself a few questions - What was the reason for which a mortgage was denied to you? Are you in a large debt already or do you have a bad credit history as a defaulter of loans? You must first take steps to make your financial position more viable than going deeper into the debt hole. Once that is done you are ready for a new mortgage for your home.
You could also use a mortgage calculator which can tell you how much money can be actually used towards paying off the debt every month.
But if you are young and haven't had a chance to establish a credit history for yourself then you may consider asking someone to co-sign your loan for a home.
In the end you should also think about what and how much is your co-signer being asked for coming on-board your mortgage deed. If there is absolutely no other way in which you can buy a home, only then, you should go ahead and get a co-signer. Co-signing is not bad if the terms are viable for both parties and if the family is willing to help you take a step forward towards your new home.
If you need any help in knowing the details of co-signing a mortgage, we as your mortgage brokers are there to assist you with every aspect of the same. Set up an appointment and we would be happy to help.