On average most people don’t have hundreds and thousands of dollars stashed away to pay in full on high-price-tag purchases. This is especially true when it comes to buying a home. People rely on loan agencies to make big purchases, no matter if it’s a car, a boat, or a house. People with poor credit, small down payments, or have poor financial history often find it challenging to obtain the loan needed to make these purchases. For a borrower to be granted a loan, they must meet all the financial specifications required by the lender. Loan companies have a strict set of financial requirements, making it difficult for many people to secure the loans they need. People unable to meet those requirements often turn to a co-signer for financial assistance. If you’re wondering whether you should have a co-signer on your mortgage, read on for better insight.
What is a Co-signer?
A co-signer is a person who takes on equal financial responsibility for the loan sought after. In homebuying, this would be a mortgage loan. With the right co-signer, the potential buyer can boost their chances of securing the loan needed. A co-signer is essentially the safety net should the primary buyer fail to make any payments. Being a co-signer requires a lot of trust and faith. While a co-signer shares equal financial commitment, they may not share any stake in the home purchased with the loan. Often, we see family members or close friends commit to co-signing on a mortgage. Unfortunately, the relationships between the two don’t always end up well. Getting in on such a big commitment together can cause a lot of stress and pressure. It’s not something that should be taken lightly and must be carefully considered by all parties.
How it Affects the Co-Signer?
As mentioned, asking someone to co-sign on your mortgage loan is a big request. If the primary buyer fails to make any payments, it is the co-signers responsibility to keep up with them no matter what. Failing to make payments will negatively affect both of your credit history, making any future purchases extremely challenging. The process of re-building credit after a loss can be difficult and should be avoided at all costs. Unless you are confident that you can faithfully keep up with your mortgage payments, it is best not to put you and the co-signer in a position where you both can get hurt.
Should You Get a Co-signer on Your Mortgage?
In general, we try to avoid using a co-signer unless you absolutely need it. In the end, it can cause stress between you and the person who co-signs on your mortgage. While the co-signer may initially be happy to help, it can cause them stress knowing they now have the financial responsibility. If you’re still not certain whether this is the right route for you to take or are interested in learning more about other options available, be sure to reach out to one of our CMAs. We would be more than happy to assist you and help you make the decision that is best for you.
Community Mortgage is Here to Help!
We are a mortgage broker who truly cares about our client’s experience. We focus on providing open and honest communication, educating borrowers, and finding the best solutions for every situation presented to us. We are happy to answer any questions you may have. If you have any questions regarding the mortgage process, Community Mortgage is here to help. Contact us today at (619) 692-3630 or click here for a FREE mortgage consultation.
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We work with and for our clients to provide them the best mortgage options to help them achieve and maintain home ownership.
814 Morena Blvd #310
San Diego, CA 92110
Phone: (619) 692-3630
NMLS ID # 908271
Community Mortgage, Inc. is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines