Welcome to our First-Time Homebuyer Blog Series. We’ve compiled answers to frequently asked homebuyer questions to help you understand the many variables associated with buying your first home. It’s our job to make this process as enjoyable and stress-free as possible for you!
There have been a lot of changes to mortgage rules over the past few years, including new qualification standards introduced this year.
This means that, sometimes, a mortgage applicant may need a little extra boost to help qualify with a traditional lender for the loan amount required to get into your new home.
Credit blemishes – resulting from such things as illness or divorce – can also prevent you from qualifying for a mortgage.
While there are alternative and private options available, you may benefit from having someone come on the deal as a co-signer to help you qualify for a mortgage.
If you simply can’t afford the home you’d like to purchase, it’s always in your best interest to take another look at your financial situation and either set your sights on a more affordable property or wait until you’ve saved more money.
But if having a co-signer is the lift you need to qualify for a mortgage on a home that’s within your means, it can be a great solution.
What do I look for in a co-signer?
hen seeking a suitable co-signer, it’s important to consider someone who compliments what you’re currently lacking in the eyes of lenders. If, for example, your issue is poor credit, you want to enlist help from a co-signer who has healthy credit. Or, if your income is preventing you from qualifying on your own, you’ll want to find a co-signer who has strong income.
o-signing can work a couple of ways:
1.The co-signer becomes a co-borrower who fills a similar role to that of a partner/spouse who’s buying the home with you. Basically, this involves adding the support of another person’s credit history and/or income to the application. He/she is put on title for the home and lenders consider this person equally responsible for the debt should the mortgage go into default
2.The co-signer becomes a guarantor who’s backing the loan and vouching that you’ll pay it back on time. He/she is responsible for the loan if it goes into default
n most cases, parents or other close relatives are commonly accepted as co-signors. As well, more than one person can co-sign a mortgage. In order to be an effective solution, the lender must feel comfortable that the co-signer(s) will help lessen the risk associated with repayment of your loan.
Have questions about co-signing options, or buying/selling a property? Answers are a call or email away!
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