Hi, my name is Joel Wieser, and I'm a loan officer in Brooklyn, New York. And today I want to educate you about the term co-signer. What is a co-signer, where is in which scenario is a co-signer helpful, and which scenario is a co-signer not helpful. Then I want to turn to the co-signer and just educate them about the risky staking and for how long it is.
So first let's talk to the borrower. When you wanted to buy a house you try to get qualified, but you didn't have enough income to qualify for the house you want to buy. This is where a co-signer can be helpful. A co-signer that has enough can come in and be a co-signer on the loan.
Then we're going to use the co-signer's income to help you qualify for the loan. Once the co-signer has enough income, you don't even need to be employed because there's two people on the loan. This is how much money we would need for the loan, and we have enough income. You as the, as one of the borrowers, we don't even need to see if you're employed.
This is one misconception that I want to point out. When you take a co-signer, the co-signer doesn't need to be on the deed of the house. They're going to be on the loan, but they don't have to own the house. The house does not need to be on their name as well.
A co-sign is a very helpful thing when it comes to income and when it comes to assets as well. If you need some assets on the loan and for some reason you don't have enough money in your bank account, if there's two people on the loan: one you and one a co-signer, and the co-signer has a lot of money in his bank account, you can use this money for assets, for the loan.
Where the co-signer is not helpful: let's say you as a borrower have low credit. A co-signer is not going to be helpful. And the reason is when there's two people on the loan, they're usually going to go according to the person who has the lower credit score.
So if one of the borrowers has a low credit score or has no credit score, a co-sign is not going to be helpful. Now let's talk to the co-signer for a minute. Let's say you were the co-signer, what is your risk? There's two risks you can take. Number one is: this mortgage is going to be, you're going to be responsible for that.
If anything goes sideways with this motion, there's a late payment. Or God forbid, if it's even worse, if it closes, your credit is going to be messed up. So you have to really trust the guy you're co-signing for. And the other thing is: because you're going to be on this loan, you're going to be responsible for this mortgage payment.
So let's say tomorrow you're going to take out another mortgage. This loan is going to be on your credit report. They want to make sure you have income to pay for this loan plus for the new loan. So this will be in the debt to income ratio, this will be included in your debt. Who is on the loan - which is the original borrower, has made 12 payments from his bank account. Paying the mortgage is showing that he's the one that pays the mortgage.
Once he consistently has 12 months of making payments, then it can be excluded from the debt to income ratio. So make sure that the other borrower who pays the mortgage doesn't do it by a one-day order, or he doesn't pay cash because you will be obligated to show that other person pays it and so you want to make sure it comes out from his bank account.
Now for how long are you obligated on this mortgage? Once you sign this, they call it the promissory notes. So everybody who's taken out a loan, you're helping them with a loan. You're going to be responsible till this loan is spent. You took responsibility for this loan, so how long this loan exists is how long you will be responsible.
So again, my name is Joel Wieser. If you have any questions, mortgage related, co-signing, or any other topic regarding mortgages, feel free to reach out to me. I'm here to help you! You can reach me by the Find My Way Home network. They have a lot of good experts, including me, here and ready and willing to help you.
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Joel Weiser NMLS # 1509389 Loan Officer 7016 Fort Hamilton Pkwy Brooklyn, NY 11228 (917) 539-7704 firstname.lastname@example.org
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