As the housing market continues to fluctuate, home buyers are looking into resources to bring them closer to homeownership. If you’re struggling to get the approval you want for a mortgage, one way to help bring you closer is a cosigned mortgage!
But what exactly is a cosigned mortgage? And how do they work?
What Is a Cosigned Mortgage?
A cosigned mortgage means a secondary person, often a family member, who is financially stable and has good credit signs on your mortgage to help you reach the necessary qualifications and be eligible for a good loan. By doing so, they are legally affiliated with your mortgage.
How Do Co-Signed Mortgages Work?
In the event you cannot afford your payments, the cosigner takes over and covers the payments/loan. When signing the paperwork, your cosigner will need to provide similar documentation that you provide to your mortgage lender at the approval stage, such as bank statements, proof of employment and more.
Who Should I Ask To Be My Cosigner?
As the role of a cosigner comes with a lot of responsibility, you want to ask someone you have a strong relationship with and trust. Parents or grandparents are common consigners, as they want the best for their children/grandchildren and often are in a stable position to support them when needed.
Does the Cosigner Get Any Benefits From the Mortgage?
Not particularly — the main purpose of the cosigner is to act as a financial guardian, as they are legally responsible for the loan. You are the owner of the property, not the cosigner.
Does Cosigning a Mortgage Impact the Cosigner’s Credit?
Yes, if payments are missed, it negatively impacts both your credit and the cosigner's credit. However, if you consistently make payments, both your credit scores slowly increase!
Can They Stop Being a Cosigner Once I’m Financially Stable?
Yes, but it’s a bit of a tricky process. You’ll want to contact your mortgage lender first and begin the process from there, usually through refinancing your mortgage.
Should I Ask for a Cosigner?
That’s up to you! It’s a beneficial process if you want to get your home-buying journey started but need assistance, and comes with perks for both you and the cosigner. You can try other solutions if you desire, such as
increasing your credit score, but there’s nothing wrong with asking someone you trust to be your cosigner! Of course, understand the cosigner comes with a lot of responsibility on their part, and have compassion if the person you’re asking may feel uncomfortable with the position.
We hope we were able to answer all your cosigning questions! Want to begin browsing? Check out our new
home models!