Will the mortgage company count the payment I co-signed for my sister’s new car? It depends. Generally, your total debt obligations plus housing expense cannot be more than 43% of your gross income (this is called a debt to income ratio). Make sure you ask your trusted mortgage loan consultant, when qualifying to buy a new home- Jimmy Smith in Texas.
When you co-sign on an obligation you are promising the creditor that you will pay the obligation back, if the original debtor doesn’t pay. The lending world calls this a contingent liability, which is a potential liability. For example, if you guaranteed your sister’s car loan (co-signed), you have a contingent liability. If your sister makes her car payments and pays off the loan, you will have no liability. If your sister doesn’t repay her loan and fails to make payments, you have a liability.
Per conventional underwriting guidelines under Fannie Mae, you have to meet two conditions so that the liability is not counted in your debt to income ratio:
-proof of 12 months that the other party paid (usually 12 months cancelled checks)
-12 months of on time payments
Co-signing could prevent you from buying your home. However, it does depend if the mortgage company will count the payment you co-signed for your sister’s new car. Again, make sure you ask your trusted mortgage loan consultant, when qualifying to buy a new home- Jimmy Smith in Texas.
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