Will A Co-Signer Help You Qualify For A Bigger Mortgage?

Will A Co-Signer Help You Qualify For A Bigger Mortgage?

two home buyers co-signing a mortgage loan

The answer is most often Yes!  With our current real estate market, getting a Mortgage for as much as you’d like is not as easy as it once was. With rising rates and more government mandated qualification criteria, it is certainly more challenging - all of which are confusing and frustrating for the average person especially when they know they can easily afford the payments for more mortgage than they qualify for on paper.

But don’t worry – there are options that don’t often get discussed. A popular way around difficulty getting approved for what you want is to have a mortgage Co-signer.

What is a Co-Signer?

A co-signer is someone that’s added to the mortgage application/contract. This person is financially stable and adds value to the mortgage application.

A house is the biggest purchase of your lifetime, therefore, there are many factors that play into getting you approved. These factors usually include your credit score, income, debt service ratios, and lender interest rates. Again, it is now more difficult than ever to jump through all of these hoops by yourself; that’s where getting a co-signer can become a helpful option!


What are the two types of Co-Signers?

There are 2 major types of co-signers. The first is a co-borrower. You would share the title and financial responsibility equally. Both parties are responsible for paying the mortgage.

The second is a guarantor, a co-signer who doesn’t gain a title, but vouches to the lender and is responsible for the debt if the titled owner defaults. The majority of lenders prefer the cosigner to be a co-borrower.


What are the possible risks of being a Co-Signer?

If you are the co-signer you take responsibility for the loan repayment, along with the main borrower. If the main borrower misses a payment, you will be responsible for paying it. If both the main borrower and the co-signer also miss that payment, it will appear on all signer’s credit reports.

The co-signer will also have an increased debt service ratio afterwards. This may cause problems for them when they try to get another loan or mortgage, as this may limit their ability to borrow in the future.


What are the benefits of having a Co-Signer?

There are many benefits in having a Co-signer for your mortgage.  You can borrow more money than you qualify for on your own, having a co-signer may aid in the approval if you don’t have much credit experience, and having a co-signer may aid when for example, you have newer employment.


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