SHOULD YOU CO-SIGN A LOAN?

By
Mortgage and Lending with D A Griffin Financial.LLC NMLS 6380
https://activerain.com/droplet/5fsv

SHOULD YOU CO-SIGN A LOAN?

 

In the mortgage lending business we often discover when pulling credit that an applicant has co-signed a loan for another party. Most often that is for a close family relative, sometimes it is for a friend. When co-signing a loan many co-signors get it wrong in that they simply think they are lending their credit score or history to get another party a loan. They rarely consider the fact they are obligated to make the payments in the event the borrower does not. 

The facts are that if one agrees to co-sign a loan they are agreeing to allow a lender to use their good credit standing to make a decision to lend and agreeing to pay if the primary party does not, while risking their credit standing and spending capability.  Co-signing can be problematic when the co-signor is seeking other financing because the debt is counted against the co-signor. Now, with some mortgage loan products if an applicant can show the primary borrower on the cosigned loan is making payments from their own funds for an extended period there may be a way around the debt.

Particularly if one sees a home purchase in their near future they should NOT co-sign a loan for another party. In general, it is often not a good idea to co-sign without careful consideration of the consequences.  One could end up with a debt to pay or damaged credit if the primary responsible party does not pay in a timely manner. Too often if one co-signs a loan they don't pay any attention to whether that debt is being paid on time until their credit is ruined. 

Use extreme caution when considering a co-sign. At a minimum you may take the proactive step of collecting funds from the primary party and paying the loan yourself or carefully monitor that payments are being made. Know that when you co-sign YOU are guaranteeing the loan to be paid. 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Lending / Financial
Location:
Kentucky
Groups:
Mortgage Professionals
Cincinnati Real Estate
Mortgage Brokers
Mortgages
Realestateandfunding
Tags:
mortgage loan
cosigning
cosigning a loan
cosignor
should you cosign a loan

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
625,902
Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

Generally, the answer is no. Very risky proposition. Important subject though and thank you for sharing Dora Griffin

Aug 24, 2018 09:16 AM #1
Rainmaker
3,977,717
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

In reality, co-signing is not a  great option especially if you plan on making any kind of a large purchase as it can affect your ability to buy

Aug 24, 2018 09:41 AM #2
Rainmaker
230,036
Dora Griffin
D A Griffin Financial.LLC - Fort Thomas, KY
NMLS 6380

Thanks for the comments. I totally agree. By the time I speak with home buyers sometimes it is too late. Best case we have to hope the primary is paying on time and that they can document those payments are from their own funds.

Sep 17, 2018 07:12 AM #3
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
230,036

Dora Griffin

NMLS 6380
Ask me a question
*
*
*
*
Spam prevention