More home buyers are using mortgage co-signers as home prices rise, according to a study by ATTOM Data Solutions. During 2017, about 22.8% of all U.S. purchase mortgages involved a co-borrower or multiple co-borrowers, up from 20.5% in 2016. The study excluded co-borrowers who were married to the primary borrower, which would have boosted the figures.
The co-signer trend is growing fastest in cities where home prices have skyrocketed. Yet the use of non-spouse co-signers is gradually ticking higher just about everywhere.
Mortgage co-signers typically include family members of first-time home buyers. But the emergence of multiple co-signers suggests that small investment groups and other financial partnerships are playing a larger role in home purchases.
If you are considering the use of a mortgage co-signer or co-borrower when buying your Columbus home, there are several things to keep in mind!
On the plus, using a co-signer can strengthen your mortgage application. This can allow the lender to offer you better interest rate, and qualify you for a larger loan amount. And as long as you make your mortgage payments on time, your credit score will strengthen.
However, the co-signer faces some risks. If you, as the primary borrower, fail to make timely payments, the co-borrower’s credit score will be penalized right alongside of yours. In the lender’s eyes, the co-signer is equally responsible for the debt, no matter what arrangement you might have among yourselves.
Thus, if you default on your mortgage, the co-signer will have to make the mortgage payments. Otherwise, they could become a co-defendant in a foreclosure action.
Another concern for the co-signer, is that other lenders will count the mortgage as an obligation against their credit. This can negatively affect the co-signer’s ability to refinance their own home, or obtain financing for a new car, or gain loan approval for any other purpose.
There is one way you can eventually get the co-signer off the hook, short of selling the home. Namely, by refinancing the mortgage in just your name, without any co-signer. This would require that you have the income, credit standing and home equity position to qualify on your own. The downside: you could be looking at a different interest rate environment by then, for better or worse.
When you are ready for mortgage assistance, you can trust Buyer’s Resource Realty Services to refer you to local, reputable lenders! And because we provide fiduciary buyer representation, we can counsel you on the pros and cons of various mortgage offers.
As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
Andrew Show
Broker, CEBA-M, CNE, CSP, PSA, e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services, www.buyershome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax
