Buying a home with co-signers?

Question

I am not purchasing a home yet, but I know my wife and I have some unfavorable remarks on our credit report which I imagine would serve as barriers to purchasing a home.

My parents have good credit standing however. Would it possible for them to serve as co-signers for the mortgage? I know you can do that with cars but I wasn't sure about homes. What are the advantages and disadvantages to doing this?

Answer 1

Work on cleaning up your credit reports.

Did you know you can dispute any of the negative things that are on your report chances are you might even get them deleted.

If you have a late payment with a lender but have been current for more than 6 months send them a letter asking them to remove the negative mark.

Answer 2

yes, and a credit worthy co-signer will help you get approval.  After your credit is improved, you can eventually refinance your home and get your parents co-sign removed, which is important for them if they wish to obtain credit in the future.  By co-signing on your loan, your parents will be taking on some risk that an underwriter would count against them if they were to want to refinance their own home or make a large purchase using financing.

so be sure to think that through as well, what the impact would be on your parents if you can't get them off your mortgage before they need credit again themselves

Answer 3

Yes they can do that, but they would be FOOLISH to do it and you would be a bit inconsiderate asking that of them.

The reason you have unfavorable remarks on your credit rating is because you EARNED them.  Typically, your credit report is a fairly accurate reflection of your past BILL-PAYING performance.

If your parents co-sign on a loan, they are taking a tremendous risk.  If you are late on payments THEIR credit rating gets thrashed.  AND they are FULLY liable for any money that you don't pay.  So, if you can't make payments at some later time and the home is foreclosed on, the lending institution can come after them for lots-of-money!

The bottom line is that if you can't qualify for a loan on your own, then you shouldn't be buying a house. In case you haven't been paying attention to the news lately, that's what has caused this HUGE mortgage crisis - people unwisely being allowed to take out loans to buy houses that they couldn't afford.

Sorry for the harsh answer, but if I were you I'd work to clean up your credit reports and save money for a downpayment so that you can qualify for a loan on your own.

Answer 4

Yes, you can do this if they are willing.  Advantage is the bank will look more favorably on your loan since your parents (with better credit) are also signing on it.  Disadvantage is if you can't pay the bank will come after you and your parents for the money and your parents may have to either pay your debt or have their credit hurt along with yours.

Answer 5

Yes it's possible to use cosigners for a mortgage.