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NicoleT
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Post subject: Co-signing |
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My husband and I currently rent and the owners need to sell. They have given us the first option to purchase. We have agreed on a purchase price and have determined through a lender that because of our income we only qualify for an FHA loan and will need a co-signer and my parents are concerned about how it will affect their ability to get loans/ credit should they need too in the next few years. Can someone tell me how it truly will affect them? They do still have a mortgage and then off course if they add our mortgage to their credit does it show they have hundreds of thousands of dollars of debt in mortages?? We live in CA and I know they owe about $200k on their house and our loan is for $400k.
Thanks for the insight! |
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Niicss
Joined: 03 Oct 2005
Posts: 4834
Location: New Jersey
508.88 Dollars($)
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If your parents co-sign for the loan, they would be equally responsible for paying the mortgage dues. In case you default the mortgage payments, the lender will come after them. If you default the loan, it will also affect their credit scores. Moreover, they may not qualify for a loan if they co-sign for your mortgage. Also, this will increase their debt to income ratio.
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Good is the Enemy of Great. |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 12376
Location: bloomfield, ct
58.49 Dollars($)
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For most lenders, it would be sufficient for your parents to prove that they were not actually making payments on your loan in order for the lender to not include that debt in an analysis of their ability to borrow/repay a new loan. That proof would require at least 12 consecutive monthly payments to be documented as paid by you.
Yes, this does affect their ability, and that's the simple answer. How much, of course, depends on how their overall financial picture looks. If they've got copious income and negligible other debt beyond their mortgage, then that'd serve them pretty decently. If they've got auto and/or personal loans plus credit card debt, it can hurt them.
And yes, their obligation on your loan is 100%, but that won't have any real impact on them unless you default, as Niicss noted.
I don't see them cosigning for your mortgage as having a detrimental effect on their credit scores, for the most part. There might be a slight dip initially, but it will be lessened as time goes on.
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George M. Akerley
Mortgage Underwriter/Consultant
Word of Excellence- Writing/Editing/Proofreading
860-221-5044
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NicoleT
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Post subject: Co-signing |
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| Thank you both for replying back. I have one last question... part of the reason we need them to co-sign is my husband owns a business and has not shown a lot of income on his tax returns the last two years. This is a little misleading in that we do have the monthly income but are also able to right-off a lot for business expenses. The current loan specialist we are working with says that once my husband shows more income my parents could come off the loan pretty easily. He is leading me to believe this is an easy process, but I am assuming we would need to refinance, is that correct? Thanks again for you responses. Nicole |
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Niicss
Joined: 03 Oct 2005
Posts: 4834
Location: New Jersey
508.88 Dollars($)
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Post subject: |
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| It is true that in order to remove co-borrowers from the mortgage, your husband and you will have to refinance it. |
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Eserkovich
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Post subject: FHA loan with a cosigner |
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| Is a score of 588 (high risk) with a cosigner possible to qualifier for a FHA Loan? |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 12376
Location: bloomfield, ct
58.49 Dollars($)
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Nicole, that loan specialist is obviously not terribly well informed as to the need for you and your husband to refinance that mortgage when the time comes. The phrase "once my husband shows more income" is pretty nebulous, and that could be anywhere from the 2010 tax year on. writeoffs are a part of the self employment situation all over the country, and how they are perceived in the next year or two or beyond by an underwriter is yet to be determined. Don't let that person mislead you. It's not just a thing you can do "pretty easily."
_________________
George M. Akerley
Mortgage Underwriter/Consultant
Word of Excellence- Writing/Editing/Proofreading
860-221-5044
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anonymous34
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Post subject: SCORE OF 685 |
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| I MAKE ABOUT 34000 A YEAR .I AM SINGLE AND WANT TO BUY A SINGLE FAMILY HOME UNDER 100K CAN I DO THIS WITHOUT A DOWNPAYMENT |
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anonymous75
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Post subject: 2 cosigners on an fha loan? |
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| Is it possible to have more than 1 cosigner on an FHA loan? |
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jameshogg
Joined: 20 Dec 2005
Posts: 10477
Location: Nevada
990.06 Dollars($)
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Hi anonymous,
Without a down payment it would be quite difficult for you to qualify for a loan. The lender will want you to go for a private mortgage insurance if you're unable to give a down payment.
Hi Guest,
As far as I know, you will be able to have only 1 cosigner for the mortgage.
Thanks |
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Earnel
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Post subject: Co-sign with wife |
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I co-sign with my mother in a home purchase under FHA loan as owner occupant last Feb 2010. My mother live in that house with my brother. My brother pays for the monthly mortgage. I don't live in that house since the intent of buying that house is for my brother to live
with my mother to take care of her.
My wife and I would like to buy a house of our own. Currently, we are renting. Is it possible for me to co-sign with my wife in the purchase of a house with Conventional loan even though I have co-sin with my mother on a FHA loan? Am I violating any of the FHA rule if I co-sign with my wife for the purchase of the house? We plan to live in this house as our primary residence |
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adonis
Joined: 22 Oct 2005
Posts: 10562
Location: ALASKA
1089.18 Dollars($)
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Welcome Earnel,
You've already cosigned for a mortgage with your mother. In that case, I don't think the lender will allow you to cosign for another mortgage. You will have to ask your mother or your brother to refinance the loan in their names. Once that is done, then you can cosign for your wife's mortgage.
_________________
Procrastination is the enemy of your financial success |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 12376
Location: bloomfield, ct
58.49 Dollars($)
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Post subject: |
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Earnel, there isn't any conflict in your cosigning two different loans, and you're not breaking any rules to do so, either. The rationale behind Adonis' post (I'm sure) is that your debt ratio may be stretched a bit too far, what with the current loan that you're obligated on. If your income is sufficient, particularly when combined with your wife's, then I'm sure the new lender will consider it.
_________________
George M. Akerley
Mortgage Underwriter/Consultant
Word of Excellence- Writing/Editing/Proofreading
860-221-5044
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short sale 631
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Post subject: trying to get aloan... |
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My husband is trying to get an fha loan with his creidt score of just 620. His score just went up after clearing some judgements and charge off's. Will he be able to get a loan with out 2-3 postive tradelines.
He only has 1 at this time. And he has only had it since feb 09?
Were desprate and trying to get the home we have been renting that will go into foreclosure very soon... |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 12376
Location: bloomfield, ct
58.49 Dollars($)
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Post subject: |
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Well, it is definitely worth a try. Since you have been renting, you ought to be able to use a rental reference (even though your landlord is about to lose his home), and he may be able to supplement his file with alternative credit references. Go shopping for a lender and find out specific requirements. It's not impossible, though it may be difficult.
_________________
George M. Akerley
Mortgage Underwriter/Consultant
Word of Excellence- Writing/Editing/Proofreading
860-221-5044
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