A Closer Look at Co-signing a Mortgage in Boulder, CO

Qualifying for a conventional loan in Boulder, CO with Castle Rock Mortgage is relatively straightforward. However, there are situations that can make it challenging for some. This can be the case for home buying hopefuls who have the income to qualify but lack credit history.

Or perhaps they have a few dings on their credit, making it difficult to get the lowest rate possible or even get approved at all! In situations like this, many homebuyers decide to use a co-signer.

Becoming a co-signer is a generous gesture, but there are some risks associated with co-signing that should be considered before you agree. Here’s what you need to know before entering into a co-signing agreement with a family member or friend.

What are the responsibilities of a mortgage co-signer in Boulder, CO?

Being a co-signer is not the same as owning a home. Ownership falls under the title, not the mortgage. So the primary responsibility of the co-signer comes down to the loan, essentially putting your name and credit on the line to secure the loan.

This financial responsibility becomes particularly critical should the primary borrower miss monthly payments or default.

The moral of the story is that helping out a family member or friend get a loan by co-signing is generous, but it’s crucial to understand your responsibilities before committing.

How does co-signing affect your own finances?

If the person you are co-signing for defaults on the loan, your credit will suffer right along with theirs. Late and missed payments will appear on your credit report, lowering your credit score.

Also, keep in mind that you’ll be expected to pay the required payments as the co-signer for a loan, just like the primary borrower. Whether the primary borrower stopped paying for reasonable reasons like job loss or untimely passing, as the co-signer, you’ll still be responsible for the loan.

Keep in mind that being a co-signer can also affect new loan applications. So if you’re not in good standing with this mortgage, it can make it difficult for you to get approved for another loan. 

Also, you may lose any collateral if any was used to secure the loan. 

To simplify the process, apply for a Boulder, CO home loan with Castle Rock Mortgage.

What are the buyer’s benefits of using a co-signer?

Sometimes using a co-signer is the only way one can qualify or afford a home loan. Here are some of the benefits of using a co-signer:

  • May be able to use median credit scores

  • May allow you to qualify for a lower down payment (between 3.5%- 5%) for a conventional or FHA loan.

  • For those with high DTI, you have a better chance of qualifying with a co-signer.

Do you want to learn more? Contact a trusted and experienced mortgage broker in Colorado to know more about your loan options. 

Will you use a co-signer?

Getting a mortgage is a huge financial decision, and it’s not easy to qualify due to one’s credit and income situation.

If you plan to get a conventional loan in Boulder, CO, you can increase your chances by having a co-signer on your side.

Our team at Castle Rock Mortgage can guide you through the process and get you the best deal on your loan application.

 


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.