A cosigner goes on the mortgage with the primary borrowers. If the borrowers don’t fully qualify for the loan on their own (usually due to deficiencies in income, credit, down payment, or all three) the cosigner’s better credit and financial situation make the mortgage application stronger.
The borrowers still need to meet minimum loan requirements. But a cosigner helps strengthen an application when the borrower meets the bare minimums but has a weak application.
There are a few groups of people who are most likely to benefit from having a cosigner on the application.
Lenders approve loans based on different criteria, including credit scores, debt compared to income, and how much of a down payment you have.
For instance, if a borrower has just 5% down, a credit score of 620, and a 42% DTI, they are weak in all three of these important qualification areas, and the lender may not approve the loan (even if it technically meets minimum qualifications).
A cosigner with good credit and a low DTI may add strengthen this application enough for it to get approved.
Cosigning does have some limitations.
No matter the cosigner, you still need to meet minimum qualification standards for down payment, credit, and income.
The cosigner must have a familial relationship with the primary borrower. This would be a grandparent, parent, sibling, aunt, uncle, child, or something similar. It can also be someone who you’ve had a close, long-term relationship with but who isn’t necessarily related to you by blood (this might require some extra paperwork).
Cosigners also must be U.S. citizens or resident aliens, and lenders may require the consigner to live in the same state as the primary borrower and/or the property. This is usually the case if state law would make it difficult to pursue an out-of-state cosigner if the loan went into default.
The cosigner will usually be on all the documents relating to the loan, but they are not on the title to the property. They don’t own the property, and they have no legal right to the home. They can’t use it to pay off the mortgage debt in the case of a default, either.
The cosigner is legally responsible for the mortgage until it’s paid off. If the loan goes into default, the cosigner is responsible for payments until the primary borrower resumes payments. Late payments or a loan default will impact the cosigner’s credit.
Cosigning for a mortgage could impair their own ability to get a loan in the future because it will likely be counted as debt by a future lender.
There’s no easy way to remove a cosigner from the loan. You’ll almost always have to refinance in order to do it.
If you’ve been in the home for a couple of years and have made all your payments on time, you should be able to refinance and remove the cosigner from the loan and from all responsibility for that loan.
If you have any more questions about potentially using a cosigner or about qualifying for a loan, please reach out via phone or email! I’ve worked through many complicated loan scenarios and am happy to help you with yours.
“Mark, Darci & Co were wonderful to work with! They were responsive, managed a complex buying situation with ease, incredibly communicative and always ensured I was caught up with what was going on and where I was in the process. Heavily recommend!”
- Zach J.
“ Mario provided excellent service. Not only was he professional and helpful, but the personal support and reliability was something hard to find these days. I will not be using anyone else and have confidently referred him to friends and family.”
- Heather C.
“ My experience is always fantastic & seamless. Mayen Grigorian is a true professional. He’s honest, he goes above and beyond, he’s efficient, always available and knowledgeable. I never have to call for updates he beats me to it and sends updates regarding the loan. Our clients are very happy and we’re very happy! Five star service, I can’t say enough good things about Mayen as a person and a professional. Hands down! He’s The Best!”
- Taline S.
“This review is about Mark and Darci Richardson from CSMC Mortage in Simi Valley. This team is the BEST! For the past 12 years our home was "underwater" due to the "crash" in 2007, and unable to do anything with the mortgage except pay it. These two kept on top of things and finally the house qualified to REFI. We just completed everything and it closed last week... and they saved us over $900 a month!! That's a huge savings for a couple of senior citizens! We are SO happy now and finally can breathe. Thanks to Mark and Darci and CSMC Mortgage for following through, jumping through all the hoops necessary and helping us out! I can't recommend them more... they are the BEST!!!”
- Shari S.
“Laura Hertz is the best lender I've ever worked with in my 25 years as a Realtor. I never have to worry that she has things handles and she always performs in the best way possible. I also know that she is an advocate for my buyers and not only does she meet their expectations but she exceeds them! She is my lender for life!”
- Paula K.
“CSMC is always our go to lender. Denise Bizzy is fabulous. She really went the extra mile trouble shooting solutions to problems our client had. I do not believe another lender would have been able to pull this off. Five stars for the A+ service from Denise Bizzy and CSMC Mortgage!”
- Mark L.
“Darci, Mark and their team of professionals made the purchase for our amazing buyers absolutely seamless. The level of service they provide is second to none! They delivered the best rate and the best terms for the clients. Mark and Darci are very transparent with their fees and have a stellar reputation in the community. I highly recommend Darci and Mark for all your mortgage needs!”
- Gabby G.
“Faye helped me purchase my first home last year. She was very professional and worked very quickly to help me procure financing. She made herself available around my schedule and took the time to explain my options for financing to help me get the lowest rate possible. Would highly recommend her to anyone looking for someone that is professional, highly knowledgeable, polite, and responsive.”
- James Z.