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Co-Signors and Gift Letters – Impact on the Real Estate Transaction
Co-Signors and Gift Letters – Impact on the Real Estate Transaction
 
Saving for a downpayment and closing costs is often very challenging for first time homebuyers. Income levels, as well as school loans, often affect a first time homebuyer’s ability to qualify for a mortgage, necessitating financial help with a home purchase. Depending on the loan program, buyers may be able to get assistance with their purchase if they have a co-signor or a gift.
 
The buyer who needs to have a gift or co-signor needs to realize that the lender will require documentation for the financial ability of the donor to make the gift or co-sign. A co-signor will essentially have to qualify to co-sign the loan.
Where there are often problems with financing where a gift is needed or there is to be a co-signor, is when the party is unwilling to provide their private information, or if the co-signor doesn’t realize that they don’t “qualify” to co-sign the loan or that the gift can’t be verified. Co-signors also need to realize how co-signing a mortgage can affect their personal finances going forward. The co-signed loan impacts their credit as they will be fully responsible for that loan in addition to the ... more

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