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Get Or Be A Co-Signer On A Mortgage

being a co-signer    If you have applied for a mortgage loan and the lender has asked for a  co-signer, it doesn't mean you are   being flatly turned down for that loan.  It  means your situation is very close to being approved with that   lenders guidelines but they need a little more security the loan will be paid on  time without difficulties to   you, or them.

    A lender will ask for a co-signer to accompany you on a loan when you  are lacking in either the amount   of credit or income required to service  the loan.  If the question is about credit experience, you may not   have enough history or amount (credit cards, loans)  to prove yourself.   Or, the debts you currently carry   are a little too large to debt service but  the  lender believes you can pay those debts down along with the   mortgage payment.  If the concern is poor credit, time and being responsible is what the lender is looking   for and again they have faith in you but understand you may need a helping hand to get off to a good start.

What is a co-signer?

A co-signer is usually a family member, but can be anybody that is willing to guarantee the mortgage loan you are applying for.  If you default on the loan, (including bankruptcy); the lender will require the co-signer to make the payments, so your co-signer is in a very trusting situation with you.  

There are two ways to be a co-signer on a mortgage and that is either a guarantor or a co-borrower. A guarantor will only be on the mortgage documents while a co-borrower will go on title to the property along with the borrower. There are pros and cons to both and you should seek independent legal advice for your own situation.

Responsibility of a co-signer

A co-signer is in fact making a commitment to the financial institution to repay the loan if you are unable to do so. Because they will be required to pay for the loan along with their normal payments, they will need to prove income, debts and qualify the same as you in the application.  They should carefully consider the circumstances of co-signing because this could impact their ability to secure future loans for themselves until the commitment is removed by the lender.

If a co-signer is not able to qualify for the payments with the extra obligations they may still be able to help by becoming a co-borrower.  in this scenario, debts and income will be shared by both applicants to service the debt.  The co-borrower will be placed on the title of the property but can be removed after you demonstrate the ability to repay the loan on your own.  There is possibilities of increased cost in this situation and should be discussed further.

How to remove a co-signer from your mortgage

When you feel you are able to manage your mortgage on your own you will need to contact your lender and request the co-signer to be removed from the mortgage loan documents.  The lender will have you re-confirm your information such as: employment, income, and debts to ensure you qualify on your own.  if you do not qualify the co-signer will remain until you can.  

If you feel the lender is not working with you, you can go to another lender and apply for a mortgage loan with them.  Because each lender has different guidelines you may be able to get  the loan on your own with the different lender.

When co-signer would like to be removed from mortgage

If a co-signer would like to be removed from a mortgage loan, again the borrower will need to qualify for the loan.  There are different scenarios that are available to remove a co-signer or to find different avenues for financing.  If you have any further questions, please contact me.