The COVID-19 pandemic hit us hard and most, if not all of us, are still reeling from the effects of it. Because of the pandemic, even the minimum requirements for taking out a home mortgage has increased. So is there an option for financially hit Americans who want to take out a loan but can’t because of bad credit or can’t reach the minimum requirement? Yes, by co-signing a mortgage loan.
Before you head out to take out a loan, you have to know that there is a mortgage loan process when consigning. If you are looking for a person who will co-sign your loan or if you are the one being asked to co-sign, make sure that you understand the responsibilities to go with you affixing your signature on the mortgage papers.
The first thing you need to understand is that if you co-sign a mortgage loan, you are accepting full responsibility for the loan if the other defaults. For example, a friend or family member asks you to co-sign because of bad credit, out of the goodness of your heart you co-sign. You don’t worry about it because you don’t live in the house anyway and you are just helping. But do realize that when the principal borrower defaults, the lender has all the legal rights to run after you even if you say that you don’t live in the mortgaged property.
Undoubtedly, getting somebody with a good credit score is appealing for mortgage loan officers because they know that if you default, it will not be their loss because they can run after the other co-signor to settle the debts. Co-signing a mortgage is common practice for conventional loans and FHA loans.
Government-backed loans, like FHA loans, will allow you a maximum of two co-signees. They can be family members like parents and grandparents, children, siblings, in-laws or spouses, and domestic partners. Even Aunts and Uncles can be considered as a co-signor as well. A close friend can also be considered but you need to explain the level of your relationship and state the reason why your friend is willing to help you.
There are other options that are available for you so why not explore the possibilities and let us know how we can help you.