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What is A Co-Signer and Why You Should Use One

With the housing market looking up, many people are feeling more optimistic about buying a house.

Saving for a downpayment is a challenge for some. Some people have enough savings but lack the necessary credit to be able to obtain a mortgage.

In these situations, using a co-signer can help you qualify for a mortgage you may not be able to get otherwise.

What is A Co-Signer?

A co-signer is an individual who has a strong credit score and repayment history. By co-signing your mortgage, they are leveraging this history to help you get approved. When an individual becomes a co-signer, they guarantee that the debt will be paid back.

They become responsible in the event that the primary mortgage applicant cannot pay back the mortgage.

Many young people choose to use parents as co-signers, although anyone with a strong credit score and reliable repayment history can help.

Other examples of co-signers are siblings, friends, grandparents, aunts, uncles, or anyone you know who would be willing to “lend” their credit score and history on your behalf.

Co-signers are common in the financial realm and can be used for any types of loans from store credit accounts, credit cards, or even purchasing a car.

For example, young adults who have recently landed a well-paying job right out of college may find that they need a co-signer to purchase a car. They can make the payments, but due to being fresh out of school they do not have enough credit history established to qualify for a car loan. In this case, they may ask a parent, grandparent, or partner to sign their loan as a guarantee.

Why Should You Use A Co-Signer?

There are many different reasons to use a co-signer on your mortgage. A few examples where having a co-signer can help are:

  • you have a low credit score.
  • you do not have a long enough credit history.
  • you don’t have a down payment saved.
  • you would like to borrow more money than you qualify for on your own.

A co-signer does not have to go on a mortgage for a long time, they just need to be put on for enough time for the main applicant’s to establish the items above (ex. 2 years to repair the main applicant’s credit score.)

Every situation is unique, so the best course of action is to talk with a mortgage professional.

Next Steps

These are just a few details about how having a co-signer can help you get the mortgage that you might not be able to otherwise. No matter your current situation, talk with us to explore all your options of becoming a homeowner.

Get in touch with us or call us at 519-250-4848. We are located at 3345 Dougall Ave. Windsor, Ontario (across from McDonald’s).

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