CO-SIGNING A HOME PURCHASE
Sometimes a home buyer wants to purchase a home before they have all the ingredients that would allow that purchase on their own. Generally speaking one needs to have stable income, be credit worthy, have a debt to income ratio that fits the guidelines and funds for down payment for a home purchase. Knowing what is needed well in advance of looking for a home and getting those ducks in a row is a great plan.
Occasionally a home buyer for any number of reasons is in a position they want to purchase a home and does not have the income to qualify on his/her own. In that event someone may cosign the home purchase. The co-signor's income, credit, debt, etc are taken into consideration along with the person asking them to co sign. So for starters the co-signor must qualify along with the home buyer.
If the co-signor is not going to occupy the property that information is important to know so the correct loan program is selected.
When I have a situation with a co-signor I stress to the persons buying the property it is important to understand who will be in title as well as when and how the co-signor can be refinanced off the loan. If there is a refinance in a couple of years and the home appraises higher, will the co-signor want part of that? How long does the co-signor expect to be on the loan? Will the fact someone cosigns be detrimental to that person's finances in the future?
Buying a home with a co-signor requires full disclosure between parties and an experienced loan officer to pose the questions. An experienced loan officer will know the questions to ask and understand it is important to make parties to the loan aware of their obligations as well as benefits.