You may have been asked before to cosign on a loan, probably from a family member or relative. Or perhaps you've got this funny feeling that pretty soon your granddaughter is going to make that fateful call and say, "Granddaddy, can you help me buy my first home by cosigning?"
That question will certainly tug at most grandpa's hearts and you always want to help but what are the implications from your financial perspective when asked to cosigning for a mortgage?
When someone asks you to cosign it's either because they think their credit is terrible or they need your additional monthly income in order to qualify. First, if it's a credit issue then you can stop the issue in its tracks. Mortgage lenders no longer allow someone's good credit to erase someone's bad credit. If the granddaughter tells the bank, "I have bad credit but my granddad has great credit" then the bank will let them know that unless granddad can qualify on his own and leaving the granddaughter off the mortgage entirely, it's just not possible. It used to be that good credit could compensate bad but no longer.
If however the granddaughter needs just a little more income to help her qualify for the new mortgage payment then that's a possibility, but only in a คอนโด ราคาถูก strict scenario. First, cosigners who agree to sign mortgage papers that are underwritten to conventional, or Freddie Mac and Fannie Mae loans, won't help the situation. These loans have so many restrictions on cosigners that it doesn't make financial sense.
Yet if the loan being applied for is an FHA-insured mortgage, then the granddaughter doesn't even have to have a job and can still be on the mortgage. FHA loans are the only mortgage program in the market today that has a sensible cosigner policy.
Understand also that even if you cosign and the other party doesn't expect you to help pay the mortgage each month, what happens if the granddaughter misses a payment? That missing payment will hit your credit report next month and absolutely clobber your credit score.
So think those two things through. If the loan is an FHA mortgage and you're confident that there will never be any late payments, then go for it. If there's any trepidation on your part, well, you may want to pass.
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