“Know the Implications When You Co-Sign”
I had a quick question, my dad offered to co-sign for me, would it be possible for my dad (who is retired/house paid off) to either be on the loan with me as a non-occupant or a co-signer? With the goal being to be able to up the amount of loan I can take out? Or would that not mean much for me because he is retired? Just checking-thank you!!!
I am asked this question pretty often and the simple answer is yes, but it has risks for the person that is co-signing.
Of course, the intention is to assist the borrower achieve the purpose of buying a home and often that also means taking a number of risks. What if the borrower pays a payment late? What if payments are missed? What happens if the lender looks to the co-borrower for the payments? What happens if a lender starts a foreclosure action?
Now it becomes not so simple.
I always want to have a conversation with the borrower and co-signer to review the risks and make sure everyone understands the possible repercussions if something goes wrong, as sometimes it does.