can i cosign a mortgage if i already have one

Mortgage co-signing: What you need to know

The ins and outs of getting a mortgage can be a lot to take on, especially if you have a less-than-perfect credit history. Before considering a co-signer, there are a few things both you and your potential co-signer need to know.

Looking to buy a house with a bad credit score?

If you are a first-time home buyer trying to apply for a mortgage, having a bad score on your credit report can complicate the process. But, by adding another person to sign the mortgage – aka a co-signer – you can increase your chances of getting a mortgage loan.

However, you or your prospective co-signer have a lot to learn before deciding that a co-signer is right for you. By understanding what a cosigner does and what the process means, you can better weigh out all the pros and cons of co-signing and explore your other options.

can i cosign a mortgage if i already have one

What is a co-signer?

Being a cosigner is a huge responsibility. Simply speaking, the term refers to a third-party that agrees to take responsibility for the loan if you default on payments. Remember, being a cosigner is much more than just an endorsement for the other person’s character, it is a legally binding contract. A contract that will make another person, like a family member, responsible for your debt.

If you decide to cosign for someone else, this means that a lender can come after you for defaulted mortgage payments. The lender can hold you responsible for every missed loan payment even if you don’t live in the home. 

Co-signing can help a friend or family member qualify for a mortgage if their application is poor. Having a third-party person co-sign onto a loan can make you a more appealing loan candidate.

How is that different from a co-borrower?

The distinction between the two words comes in with who benefits in the agreement. Both a co-signer and a co-borrower are taking a share of the responsibility of the loan. However, a co-borrower has an interest and stake in the investment, whereas a co-signer does not benefit at all. 

Co-signer responsibilities

Being a co-signer can be a heavy burden – you are agreeing to a contract that makes you legally responsible for the loan you cosigned onto. If the primary loan holder misses multiple payments, you will become 100% responsible for the home loan.  

Make sure you fully trust whoever you are co-signing for, making sure that they actually have the means to pay the monthly payment. In addition, you can also protect yourself by getting online access to mortgage statements, asking the mortgage lender to notify you when a payment is missed. Co-signing a loan is a huge responsibility, and one that should not be taken lightly.

Can I cosign a mortgage if I already have one?

The answer to this question is dependent on your credit history and your income. If you currently have a mortgage, you can cosign on another if you have the money to afford to pay back both loans, on top of your other expenses such as paying back student loans.

The benefits and drawbacks of having a co-signer

Having a co-signer can make it much easier to qualify for different types of mortgages, such as an fha loan or a conventional loan. Your lender will also consider your co-signer’s credit history and their debt-to-income ratio when determining if you can get a loan. A co-signer can also help by allowing you to qualify for better interest rates or for a larger loan.

However, there are also some drawbacks for the co-signer that are important to understand and consider. First, is that there is the potential for the co-signer to be solely responsible for repaying the loan. In addition, it was difficult to get out of the loan due to the legally binding nature of a co-signer. Co-signing can also hurt your credit if the primary loan holder misses a payment.

Exploring your other options

If you cannot find a co-signer or if you just want to buy a home without a cosigner, looking into home buying assistance programs or government-backed loans can help you qualify for a mortgage.

Having a co-signer is a huge responsibility for both the co-signer and the primary holder of the loan. Exploring all of your options can help you determine if obtaining a co-signer will help you qualify. 

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