Should You Have Someone Co-Sign Your Mortgage?

Some individuals looking for Encinitas homes for sale will need a co-signer to be approved for a mortgage. Understand why and how to use a co-signer to be approved on a mortgage for your ideal Encinitas homes for sale. 

When it comes to securing a mortgage loan for your ideal home you may experience some issues with being approved. This may require that you find someone to co-sign your loan in order to guarantee to the lender that the loan will be repaid. Here we will look at the “why” and “how” of getting a co-signer.

Why Get a Co-Signer on Your Home Loan?

There are several factors to consider about your financial status that may affect your ability to get a home loan. These include:

  • High Debt to Income Ratio
  • History of Foreclosure or Short Sale
  • Poor Credit Rating
  • No Previous Significant Borrowing History
  • Unsteady Employment

A co-signer may not only be able to help you get approved, but may be able to provide you with the borrowing strength you need to secure the home you need and desire.

How to Choose a Co-Signer

Choosing the right co-signer is incredibly important. This needs to not just be someone who meets the criteria of the lender such as having a strong credit history and rating and a low debt-to-income ratio, but also someone that you can trust to be in this agreement for the long haul.

In most instances the co-signer of a loan will be family members such as parents, grandparents, siblings, aunts, or uncles, though some may ask extremely close friends for assistance. For married couples the spouse is typically the co-signer.

It is typically advisable that for your protection and that of the co-signer that you enter into a formal contract that specifies who will occupy the home, who will attend to all bills and payments, and contingencies for issues such as your inability to make payments on time. In this manner you can ensure that the co-signer won’t be able to suddenly seek ownership of the home and they will be able to protect their credit rating if you are unable to make mortgage payments.

Discuss with a real estate agent in Encinitas the benefits or potential necessity of using a co-signer to help you secure an Encinitas home.

By Linda Moore

 

 

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