I'm guessing that at some point we've all wanted something so bad that we could almost taste it. But for whatever reason, we knew in the back of our minds (actually in the front) that at that particular momemt, the timing just wasn't right for us to obtain that thing that we desired. We may ponder on questions such as:
- what would I have to sacrifice to get this?
- is there something that's a higher priority right now?
- can I really afford this?
Occassionally I come across a buyer who considers asking their parents to be a co-borrower (or even primary borrower) on a mortgage loan and I wonder if the buyer has considered what a huge sacrifice that they are asking the parent to make. I wonder if the buyer considers that the request really is asking a lot of someone. But the most relavent question that I ask myself about the buyer is if they have considered what they themselves could sacrifice in order to make owning a home a reality.
Only 2 reasons come to mind why someone would need a co-borrower:
- Poor credit
- Can't afford the home (income or debt to income ratio)
I PROMISE I'LL PAY ON TIME
In either case, I imagine that the buyer has to convince the prospective co-borrowers that they (the buyer) will be responsible and that they (the buyer) will make every payment on time and will not dissapoint. I then think to myself that if they really want to prove that they were responsible, perhaps the buyer should develop a plan to clean up their credit in order to purchase a home on their own. Or in the case of income, wouldn't it be more responsible to obtain a second job if necessary in order to increase one's income so that the buyer would be able to eventually use that income to qualify for a mortgage.
WHAT IF THE CO-BORROWER LOSES CREDITWORTHINESS?
I wonder if the buyer considers that although the prospective co-borrowers have good credit, what effect would a mortgage have on the co-borrowers future need to borrow money. Would the mortgage affect their debt to income ratios to the point of being denied credit in the future? What if they were to have a short term illness and needed the use of their credit only to find out that creditiors considered them to be overextended? What if the buyer looses his/her job, can't make the payments and ruins the co-borrower's credit? Intentions are usually good, but life happens and is full of surprises.
DO I REALLY WANT OR NEED IT THAT BAD?
Asking someone to be a co-borrower on any type of loan is a big deal. Oftentimes that carrot dangling in front of us seems like the only thing that matters. Even if at the end of the day we take a little time to consider the cause and effect of our desires and request, we might find that sometimes we ask too much of others and not demand enough of ourselves.
AM I ASKING FOR TOO MUCH?
Asking someone to be a co-borrower on a mortgage is a big deal. If the co-borrower is sacrificing more than the buyer, which in all likelihood is the case, then it is by far an unreasonable request. Owning a home is a big personal financial responsibility and the best way to demonstrate your level of responsibility to self and others is to develop sound financial practices and the patience needed to work towards goals.
Think twice before asking somene to be a co-borrower.