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.
“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.
“Baret Grigorian was amazing!! From start to finish Baret was there to help in every way. I never felt like I had to call him to follow up on my loan transaction and he always kept me informed. He was able to get me great financing rates, a lower payment AND money back! Thank you Baret!! I look forward to working with you again in the future!!”
- Kenny D.
“David Honda and his team rocked!! They had great technology that took so much of the pain of home buying away. They were attentive to our specific needs and were on top of our loan process! David was always available, even when he was in Hawaii, and super responsive! Thanks David, Melissa and the team for an easy and great home buying experience.”
- Raymond F.
“With this being my first home purchase, my loan officer was very good at explaining everything to me and helping me with all my needs. Thank you for having such great people in the right place!”
- Cathleen H.
“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.
“I had the best experience with CSMC Mortgage. Buying a home is very stressful with all of the paperwork that has to be filled out. Faye was amazing! I have given several people her contact info, who are scared to take the step to homeownership. She took ALL of the stress away for me. I honestly, didn’t have to do much. She accommodated my crazy work schedule and help me get things done in a timely manner. She made me feel so comfortable and at ease. There were no surprises when it was time to sign and pay. I highly recommend her to anyone in need of her services and guidance. I can’t thank her enough.”
- Lisa M.
“These folks are conscience and easy to work with. The “calm” as the “storm” of home loans rolls through! I would not use anyone else. They make sure ALL your questions are answered, be that what competitors may have offered, or ads you may have heard or seen. What a pleasure to do business with. Thank you team CSMC.”
- Michael G.
“CSMC Mortgage took great care of us and our home buying needs. Tony was more than we could have ever asked for, he went above and beyond for us and we couldn’t have been more grateful for all his hard work. CSMC Mortgage has a great and friendly staff, I would highly recommend them to anyone looking into buying a home.”
- Jannet A.