Do You Know Your Responsibilities As A Cosigner?

Has someone asked you to be a co-signer for their home loan? Here’s what you need to know before you answer.

If someone has poor or no credit, an unsteady job, or other credit issues, it can be nearly impossible for them to be approved for a home loan. In such cases, mortgage companies will require this person to have a mortgage co-signer who “agrees to back up your loan, guaranteeing the lender that the loan will be repaid”, according to The National Association of Realtors®. A co-signer will enhance a person’s credibility as a borrower, making it much more likely that the person will be approved for the loan. But, it is important that both the borrower and the co-signer understand their respective responsibilities.

Qualities you (and mortgage companies) want in a cosigner:

  • Trustworthy

  • Someone with good credit/someone who will be approved by lenders

  • Willing to be part of a long lasting agreement

  • Have a good, steady income

  • 18 years or older

  • Willing to have their income, credit history, credit score, assets, and debts looked over by the potential lender

If you’re considering asking someone to cosign for you, these are some of the most popular choices:

  • Close, long-time friends

  • Family members

  • Parents (younger borrowers)

  • With married couples, typically a spouse will be the co-signer for a home loan.

  • Siblings

  • Aunts or uncles

  • Grandparents

  • Business partners

The National Association of Realtors® says that in an ideal agreement, “the co-signer should never have to hear from the bank after the papers are signed”. Before asking someone to be your co-signer, be sure that you understand and are ready for the responsibility of owning a loan.

If someone has asked you to cosign for them, here’s what you need to know about your responsibilities if you say yes:

If the main owner of the loan fails to make payments,

  • You are financially responsible for the loan

  • Your credit score will likely suffer

No matter what your relationship to the borrower is, it is a good idea to draw up a formal contract that both parties will have to sign. According to the National Association of Realtors®, “A real estate lawyer can help you and your co-signer draw up an agreement that specifies who will pay the bills, who will occupy the residence, and contingencies, like what happens if the main mortgage holder cannot make the payments”. Such a contract helps protect both the main owner of the loan and the co-signer against any fall-outs or worst-case scenarios. Remember, agreeing to cosign for someone is a very serious agreement to make, so be sure that you understand the responsibilities.

To read more on the responsibilities of a co-signer, check out this article from

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