SHOULD I COSIGN?
THIS BLOG HAS A LOT OF POSSIBLE CAPTIONS - I COSIGNED, NOW WHAT?
I COSIGNED, NOW MY CREDIT IS RUINED!
I COSIGNED, NOW I CAN'T BUY ANYTHING.
I COSIGNED, NOW I HAVE TO PAY.
DON'T LET COSIGNING DEBT RUIN YOUR LIFE!
I see it all the time, someone innocently signs his/her name on the dotted line, thinking they are helping a loved one. What they do not realize is if one cosigns then one IS RESPONSIBLE FOR THE DEBT. By cosigning, one is saying IF MY LOVED ONE DOES NOT PAY, I WILL.
WHEN COSIGNING MAY BE OKAY: When the debt is a very short time, maybe a year or less, and you have no need of obtaining credit yourself, MAYBE cosigning would be okay.
WHEN NOT TO COSIGN: Do not co sign on a housing loan. Do not cosign when the payback period is over a year UNLESS you are independently wealthy.
DO INSIST ON SAFEGUARDING YOUR CREDIT IF YOU DO COSIGN: HOW? You ask? You can insist the benefactor of your co signing give you their funds and YOU make the monthly payment.
I am constantly amazed that when someone cosigns a debt they have no idea that debt is theirs equally. When it is a housing debt, then the cosigner has equal rights to the property. I see the scenario played out over and over at a car dealership or other term financing agencies where the loan is offered IF there is a cosign. Someone innocently signs, not knowing they are OBLIGATED to pay.
When you cosign YOU are on the hook for the debt. You likely cannot be released even if that person is making the payments. The creditor has two people on the hook, why would they release one?
As a cosigner you will be notified in the event of default, unfortunately, you are not notified prior to default. By the time you find out, your credit is ruined OR the balance has gotten out of hand.
When you cosign on a note that debt counts against you. When you go to make a purchase, you may not be able to do so even if the payment is being made on time by the other party.
When you cosign on a thirty year home mortgage, you may be included if the home forecloses, or you may never be able to refinance your debt. Late payments on housing reflect on your ability to buy another home or refinance. I cannot think of a single instance when cosigning on a housing debt is a good idea.
Guard your credit rating! DO NOT COSIGN DEBT WITHOUT VERY CAREFUL CONSIDERATION. COSIGNED DEBT IS YOUR DEBT! YOU ARE OBLIGATING YOURSELF FOR THE TERM OF THE LOAN BEING COSIGNED AND YOU ARE OBLIGATING YOURSELF TO PAY!
