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“No” Means “Yes” if You Have a Co-signer

“No” Means “Yes” if You Have a Co-signer

family helping cosign a mortgage in barrieThough commonly used for smaller purchases such as a vehicle, as lenders tighten their credit guidelines, mortgage co-signers are becoming more and more prevalent in the housing market.

Whether you are beginning to establish your credit or you are experiencing a financial set-back, qualifying for a mortgage on your own can be difficult. If you are having trouble meeting the criteria solely on your own, you may want to consider what many home buyers have; a co-signer to help get the job done!

What a Co-signer can do for You: 

In situations where your earnings are inadequate for obtaining a specific loan, a co-signer can help you obtain better mortgage terms for you.  Assuming they have proven a steady income, limited debt and good credit, they will be in a better position to obtain mortgage approval. Whether it is a smaller down payment, lower interest rate, or a higher loan amount, a co-signer will allow for more financial flexibility. It may even make a difference in being able to purchase that nicer home you had your eyes on, but couldn’t afford to pursue it on your own.

Most importantly, while nobody wants to be in this position; in the event that you are unable to make a regular payment, your co-signer acts as financial backup, and will be contacted to look after any missed mortgage payments.

A co-signer’s assistance can especially come in handy for those who are self-employed seeking a mortgage. Self-employment often comes with periods of unsteady income, and therefore can hinder the mortgage approval in relation to employment requirements.  Evidence of your co-signers regular income should be sufficient enough to fulfill this requirement, increasing the likelihood of approval.

There are two ways to be a co-signer on a mortgage; both have their benefits, and we can provide assistance in determining what option is most viable for you. Essentially, a guarantor will be listed on the mortgage documents only, while a co-borrower is added to the title home alongside the borrower.

Who to use as a Co-signer:

When in search for a co-signer it is suggested you turn to family members or close friends as resources. While it can be anyone who is willing to guarantee the mortgage loan you’re applying for, it’s crucial they are reliable and trustworthy.

Be sure that person can, in fact, improve your chances of qualifying for a loan. In some cases, people are unaware of their own debt or poor credit, which in turn may very well affect your chances of approval.  Remember that in the end, whomever you are considering and agrees to co-sign, is assuming all financial obligations in paying for the mortgage, if you do not.

Since you are entering a long-term, legal bond with this person you want to be very careful about who you select as your partner. No matter how well you know your cosigner, it is recommended a written contract is drawn up stating the responsibilities of each party. Trust is great, but a formal contract solidifies the protection of all involved. A lawyer can assist with the contract details, and put together an enforceable agreement that outlines the role of each party.

If you want to fulfill your wish of becoming a home owner, a co-signer can give you the borrowing power you need to do!

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