Asking Someone to be a Co-Borrower on a Mortgage IS a Really Big Deal

By
Real Estate Agent with Keller Williams Realty

I'm guessing that at some point we've all wanted something so bad that we could almost taste it.  But for whatever reason, we knew in the back of our minds (actually in the front) that at that particular momemt, the timing just wasn't right for us to obtain that thing that we desired.  We may ponder on questions such as: 

  • what would I have to sacrifice to get this?
  • is there something that's a higher priority right now?
  • can I really afford this?

Occassionally I come across a buyer who considers asking their parents to be a co-borrower (or even primary borrower) on a mortgage loan and I wonder if the buyer has considered what a huge sacrifice that they are asking the parent to make.  I wonder if the buyer considers that the request really is asking a lot of someone.  But the most relavent question that I ask myself about the buyer is if they have considered what they themselves could sacrifice in order to make owning a home a reality.

Only 2 reasons come to mind why someone would need a co-borrower:

  1. Poor credit
  2. Can't afford the home (income or debt to income ratio)

I PROMISE I'LL PAY ON TIME
In either case, I imagine that the buyer has to convince the prospective co-borrowers that they (the buyer) will be responsible and that they (the buyer) will make every  payment on time and will not dissapoint.  I then think to myself that if they really want to prove that they were responsible, perhaps the buyer should develop a plan to clean up their credit in order to purchase a home on their own.  Or in the case of income, wouldn't it be more responsible to obtain a second job if necessary in order to increase one's income so that the buyer would be able to eventually use that income to qualify for a mortgage.

WHAT IF THE CO-BORROWER LOSES CREDITWORTHINESS?
I wonder if the buyer considers that although the prospective co-borrowers have good credit, what effect would a mortgage have on the co-borrowers future need to borrow money.  Would the mortgage affect their debt to income ratios to the point of being denied credit in the future?  What if they were to have a short term illness and needed the use of their credit only to find out that creditiors considered them to be overextended?  What if the buyer looses his/her job, can't make the payments and ruins the co-borrower's credit?  Intentions are usually good, but life happens and is full of surprises.

DO I REALLY WANT OR NEED IT THAT BAD?
Asking someone to be a co-borrower on any type of loan is a big deal.  Oftentimes that carrot dangling in front of us seems like the only thing that matters.  Even if at the end of the day we take a little time to consider the cause and effect of our desires and request, we might find that sometimes we ask too much of others and not demand enough of ourselves.

AM I ASKING FOR TOO MUCH?
Asking someone to be a co-borrower on a mortgage is a big deal.  If the co-borrower is sacrificing more than the buyer, which in all likelihood is the case, then it is by far an unreasonable request.  Owning a home is a big personal financial responsibility and the best way to demonstrate your level of responsibility to self and others is to develop sound financial practices and the patience needed to work towards goals.

Think twice before asking somene to be a co-borrower.

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Topic:
Home Buying
Location:
Alabama Jefferson County
Tags:
should you ask someone to cosign on a mortgage loan
can someone cosign on a mortgage loan

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Rainmaker
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Marcie Sandalow
Marcie Sandalow Evers & Company Real Estate 301.758.4894 - Bethesda, MD
Bethesda Chevy Chase DC real estate

Excellent points.  Great post. 

Feb 15, 2010 11:59 PM #1
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks Marcie.  This post was actually prompted by a comedy show that was on tv this evening.  The wife wanted to get a job so that she could do some things for herself and her husband didn't want her to work. A clear example of my point "what is it that I can do?"

Feb 16, 2010 12:16 AM #3
Rainmaker
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Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Good post -- and you are right-- there are many people who think they want a co-signer who should likely never have the loan to begin with.

Feb 16, 2010 12:16 AM #4
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks Bob & Carol.  In cases like this it makes it even more clear why loan applications receive the level of scrutiny that they do.

Feb 16, 2010 12:37 AM #5
Rainer
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Ron T. Weems Jr.
Weems Real Estate Group/N.W.R.E. LLC - Marysville, WA

Charita, Great post. This would apply to anything you would need a loan to purchase.

Feb 16, 2010 02:00 AM #6
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks Ron and you're right.  I always tease with my daughter and tell her I'd rather give you money than let you use my credit.

Feb 16, 2010 05:53 AM #7
Rainmaker
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Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Charita, 

Great point to bring up that maybe the folks aren't quite ready to buy if they need a co-signer.  Or, the co-signer really needs to understand what they are getting into!

All the best, Michelle

Feb 16, 2010 09:39 AM #8
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Hi Michelle.  Sometimes people just want what they want when they want it no matter what.

Feb 16, 2010 10:19 AM #9
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Gerry Michaels
Glasswork Media Arts - Gettysburg, PA
GettysburgGerry Social Meida

Charita, I am not coming across this anymore, as it is hard enough to get a loan even with a great FICO and money down, if you need a co-borrower I think it is pretty clear you are someplace you shouldn't be.

Great post, thanks

Feb 18, 2010 09:59 AM #10
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Believe it or not Gerry I still hear of buyers wanting to ask someone to co-sign for them.  And yes it is pretty clear to "US" that they are someplace that they shouldn't be.  But to them, their heads are sometimes in a cloud and they just want what they want.

Feb 25, 2010 08:35 AM #11
Anonymous
sunmbo

thnks for dis post charita, jst wnt 2 ask a question? me & my husband got a loan to buy a house of our own, his d 1 working bt am not, am d co-borrower,pls do i have any say on d house as a co-borrower?

May 07, 2011 05:00 AM #12
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)
Sunmbo the short answer to your question is YES. You are one of the owners and as an owner you definitely have a say. However I am sure that the question that you really want to ask involves far more details than you are providing and far less detail than I need to properly answer. In short, it appears that this is a personal issue with you and your husband and has nothing to do with you being co-borrower.
May 07, 2011 05:47 AM #13
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Charita Cadenhead

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