What is a mortgage co-signer
A co-signer is someone who applies for a mortgage with you but who won’t live in the home.
The co-signer strengthens your application by adding their income, credit, and savings and promises to repay the loan. In addition, these assurances improve the chances that we will give your home loan the thumbs-up.
In the mortgage biz, we call co-signers “non-occupant co-borrowers.” So while you’ll live at your new home, we know the co-signer won’t.
But even though they won’t live there, the co-signer takes an ownership interest in the home and will be on the title. Let’s say, for example, you’ve found the perfect home, but you still need to find a way to afford it. Your mom is willing and able to help you buy your first home, and you agree to apply together.
You and your mom will apply for the loan–you as the borrower and your mom as the non-occupant co-borrower. You’ll live there, but your mom won’t. And the lender will consider the credit history, income, and financial resources for you and your mom when processing your application.
Although you can’t get the loan by yourself, your mom’s additional resources and credit history shows the lender you’re likely to repay it. So, with your mom’s backing, we can approve the loan.
When should I add a co-signer to my home loan
When you want to buy a home but suspect you may not qualify for the loan by yourself, consider adding a co-signer to your mortgage.
Maybe you can only afford the payments if your income is higher. Or perhaps your income is enough to qualify for the home, but your debts are too high. In addition, your credit history may be limited, or you may need help with the home’s down payment and closing costs.
No matter the reason, the last thing you want to receive is a denial letter from the mortgage lender just days before your closing. No one wants to be left scrambling to finance their home last minute. This is why pre-approval is crucial, especially for first-time buyers.
Planning is the best way to ensure this doesn’t happen. Find out if you qualify for the loan or need someone to co-sign before you start shopping with a real estate agent.
It would help if you got a verified mortgage pre-approval when you’re 30 – 120 days from buying a home. Contact one of our qualified and licensed Mortgage Loan Originators for your verified pre-approval letter, so you feel confident about making an offer to buy a home.
Who can be a mortgage co-signer
Anyone willing, financially able, and who will not live in the home is eligible to be a mortgage co-signer. But there may be additional stipulations depending on the type of mortgage you want.
For a secondary market loan, co-signers need a social security number. In addition, the co-signer must be a U.S. citizen, a lawful permanent resident, or a legal non-permanent resident. Your co-signer doesn’t need to be a relative, but they should live in the U.S.
For an FHA loan, your co-signer will need a social security number, must be a U.S. citizen, and must be a relative. Your spouse or significant other can also be a co-signer if you provide proof of your partnership.
VA and USDA loans, as more specialized loan types, don’t allow for co-signers.
If you have additional question, please call one of our Mortgage Loan Originators.