What You Need To Know About Using A Cosigner On Your Mortgage

What You Need To Know About Using A Cosigner On Your Mortgage 1024 683 Jimmy Bishop

Many people look forward to the day when they will be able to buy a home. However, some people have a hard time proving their income for the mortgage process and are unable to get a loan. For example, those who are self-employed, those who get paid from commission, or who have bad credit, might have an unusually hard time getting a loan. In these cases, a cosigner might be the best option. Here are some things you need to know about using a cosigner.

1. They Will Use Both The Cosigners and The Buyers Records

If you choose to use a cosigner, it is important that the cosigner is ready to provide all of their information. Both you and the cosigner will have to go through the process together. Each of you will have to give proof of income, have your credit score pulled, look at bank accounts, etc. There are some exceptions to this. In some cases where you have a self-employed individual who does not have a long enough history of self-employment, the mortgage lender may only look at the cosigner’s income and assets. This is because they are unable to verify the income of the self-employed person. However, they still will pull assets, credit score, bank accounts and other information from both of the borrowers.

2. You Should Try To Refinance As Soon As Possible

Using a cosigner should be a short-term solution. Having a cosigner on your loan can be a risk for both of you. If you lose the house or even try to sell the house, the cosigner has a vested interest in the house, and it may become a problem in your relationship. This is why you should try to refinance the house, in your name only, as soon as possible.

Many lenders make it easier to refinance than to get the loan initially. If they see that you have made the payments without any problems, and that you are responsible enough, they will help to get you to refinance the loan.

3. Ensure Your Relationship With The Cosigner Is Strong and Healthy

There have been many financial professionals who have said to never cosign on a loan. This is because it can damage the relationship and ruin the cosigner’s credit. This is why if you chose to cosign with someone, that both the buyer and the cosigner understand the risks and feel that their relationship is strong enough to stand the stress of such a transaction.