## Can a Cosigner Help with a Mortgage?
A cosigner is someone who agrees to be legally responsible for a loan if the primary borrower defaults. Cosigners are often used in mortgage applications to help borrowers qualify for a loan or get a better interest rate. Adding a cosigner may help you with your mortgage in the following ways:
### Qualifying for a Loan
If you have a low credit score, a high debt-to-income ratio, or other factors that make you a less attractive borrower, adding a cosigner with a strong credit history and income can help you qualify for a loan. The cosigner’s income and credit history will be considered along with yours when the lender evaluates your application.
### Getting a Better Interest Rate
Cosigners can also help you get a better interest rate on your mortgage. Lenders typically offer lower interest rates to borrowers with higher credit scores and lower debt-to-income ratios. If you have a cosigner with a strong credit history, you may be able to qualify for a lower interest rate, even if your own credit history is less than perfect. A lower interest rate can save you thousands of dollars or even tens of thousands of dollars over the life of your loan.
## What are the Risks of Cosigning a Mortgage?
While cosigning a mortgage can be a helpful way to get a loan or a better interest rate, it’s important to be aware of the risks involved. Some of the risks of cosigning a mortgage include:
### Being Legally Responsible for the Loan
If the primary borrower defaults on the loan, the cosigner is legally responsible for repaying the debt. This means that the cosigner could be sued by the lender and could have their wages garnished or their assets seized.
### Damaging Your Credit
If the primary borrower defaults on the loan, the cosigner’s credit score will be damaged. This can make it difficult for the cosigner to qualify for other loans or get a good interest rate on future loans.
### Losing Your Relationship with the Primary Borrower
Cosigning a loan can put a strain on your relationship with the primary borrower. If the primary borrower defaults on the loan, the cosigner may feel resentful or angry. This can lead to arguments and even the end of the relationship.
## Should You Cosign a Mortgage?
The decision of whether or not to cosign a mortgage is a personal one. There are both risks and benefits to consider. If you’re considering cosigning a loan, it’s important to talk to a financial advisor or housing counselor to get all the facts. You should also make sure that you understand the terms of the loan and that you’re comfortable with the risks involved.
## Other Options for Getting a Mortgage
If you can’t qualify for a mortgage on your own, there are other options available to you. Some of these options include:
### Getting a government-backed loan
The Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA) all offer government-backed loans that may be easier to qualify for than conventional loans. These loans typically have lower credit score and debt-to-income ratio requirements than conventional loans.
### Making a larger down payment
Putting down a larger down payment can help you qualify for a loan and get a better interest rate. Aim to save at least 20% of the purchase price of the home.
### Getting a mortgage with a co-borrower
A co-borrower is someone who is equally responsible for the mortgage. Co-borrowers typically have similar credit histories and debt-to-income ratios. Getting a mortgage with a co-borrower can help you qualify for a loan and get a better interest rate.
## Conclusion
Cosigning a mortgage can be a helpful way to get a loan or a better interest rate. However, it’s important to be aware of the risks involved. Before you cosign a loan, talk to a financial advisor or housing counselor to get all the facts. You should also make sure that you understand the terms of the loan and that you’re comfortable with the risks involved. If you’re not comfortable with the risks of cosigning a loan, there are other options available to you, such as getting a government-backed loan, making a larger down payment, or getting a mortgage with a co-borrower.