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Co-Borrowers Replace Co-Signers With 1rst Time Buyers

Real Estate Agent with Samson Properties / LIC in VA

 I am not really a fan of co-signing because I have heard so many stories about a borrowers mother or father who co-signed for them getting stuck with paying a mortgage they can't really afford because the son or daughter they co-signed for either decided to break up, or one of them lost their job. Many times the co-signer didn't even know the payments weren't being made until months after the payments are deliquent. Many family members have quit talking to each other over co-signing going bad. Another thing I have heard several times from people that had co-signed is, that they didn't know they would be responsible for making the payments if whoever they co-signed for quit making payments.

 On the postive side, loan officer John Melnic at Presidential Mortgage is reporting that: " Many 1rst time buyers fall short of the income and assets needed to purchase the higher priced homes in our area. Lately I have had several applications using a co-borrower to assist with qualification. FHA mortgages allow a non-occupying co-borrower with the minimal down payment of 3.5%. The income and assets are " blended" and there is no specific qualification rules for the occupying borrower. As long as the person is employed and has income, it is OK."

  "Co-borrowers are usually family members or persons with an established relationship with the borrower."

 That is why when I am working with 1rst time buyers, and they mention that one of their family members said they would co-sign for them if they needed them to, I usually suggest trying first without a co-signer, and explain many of the risks as mentioned above. And most really would rather do it themselves without any help from family members.

 But in some cases, using a co-borrower  could benefit everyone. Maybe they could have some equity sharing deal, or the parents have enough money that they aren't concerned if they have to help them with payments now and then if one of them gets injured, or laid off from their job. These days, a Co-Borrower signs the mortgage application note and deed. back in the day, using a co-signer was less formal.

 But Co-Borrowing is a scenario that needs lots of discussion, and one that shouldn't be rushed into.

 If you need a good lender to work with in the Northern VA area,

John Melnic can be reached at 703-460-5510 or john.melnick@presidential.com NMLS ID 527960

1rst time buyers

Jeff Pearl / Lic in VA

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