Posted on: 13th Jun, 2011 11:58 pm
My friend is planning to take out a mortgage in order to buy his second home. But he has some credit issues and wants me to co-sign the loan for him. Will my credit be affected if I co-sign on a mortgage for him? Will I be able to buy a home later on if I wish to? Or will co-signing the mortgage will restrict me from buying a home?
Hi David,
If you co-sign for the mortgage, it will be mentioned in your credit report. You will be equally liable for the loan as the primary borrower. If the primary borrower defaults on the mortgage payments, then you'll remain liable for the mortgage payments. The mortgage default will have a negative affect on your credit report.
If the primary borrower, later on, refinances the mortgage in his name and releases you from the liability of the mortgage payments, then you will be able to get a mortgage in order to buy a home.
Thanks,
Jerry
If you co-sign for the mortgage, it will be mentioned in your credit report. You will be equally liable for the loan as the primary borrower. If the primary borrower defaults on the mortgage payments, then you'll remain liable for the mortgage payments. The mortgage default will have a negative affect on your credit report.
If the primary borrower, later on, refinances the mortgage in his name and releases you from the liability of the mortgage payments, then you will be able to get a mortgage in order to buy a home.
Thanks,
Jerry
Hi David,
Also, if you decide to co-sign and then later want to purchase a home, you would have to be qualified making both payments. A lender might take 12 months of cancelled checks from the other borrower to eliminate the requirement to cover both mortgage payments. Just an FYI.
Also, if you decide to co-sign and then later want to purchase a home, you would have to be qualified making both payments. A lender might take 12 months of cancelled checks from the other borrower to eliminate the requirement to cover both mortgage payments. Just an FYI.
Any time that a person cosigns for another person, each of them is 100% responsible for payments. Each of them will find that the loan in question will be reported to credit bureaus. Each of them is affected by any late payments. As cosigner, you are going to be held responsible for those payments regardless of whether you pay them or not, when you seek a new loan of your own - whether it's an auto loan, home loan, personal loan, etc.
Cosigning is not something to be treated lightly. You had better know who it is you're cosigning for (really, really well), and you'd better be prepared to be called upon to make payments at any time. Somehow, you'll also want to be certain that you are aware of the account status at all times - the borrower should provide you with some sort of evidence that the debt is being paid promptly.
Beware!
Cosigning is not something to be treated lightly. You had better know who it is you're cosigning for (really, really well), and you'd better be prepared to be called upon to make payments at any time. Somehow, you'll also want to be certain that you are aware of the account status at all times - the borrower should provide you with some sort of evidence that the debt is being paid promptly.
Beware!
