A cosigner is an individual who agrees to take over the responsibility of repaying a mortgage loan, provided the original borrower fails to pay down the debt.
Nichole is interested in taking a loan of $100,000 for 4 years at 5% interest rate from Jennifer. Nichole is the original borrower here. But Kate signs the mortgage note along with Nichole in order to assume equal responsibility of the loan. Here, Kate is the cosigner.
A [b:8f8a491177]good cosigner[/b:8f8a491177] should have a credit profile with the following attributes:
[list:8f8a491177][*:8f8a491177]His credit report should not have derogatory items on the credit report.
[*:8f8a491177]The cosigner should have maintained a good credit history for 4 to 5 years.
[*:8f8a491177]The total credit should not have exceeded a certain limit.
[*:8f8a491177]Credit obligations are maintained as per the terms and conditions.
[*:8f8a491177]A number of revolving credit lines remain unused.
[*:8f8a491177]He should have steady income to meet the current debt requirements.[/list:u:8f8a491177]A cosigner is required to sign the mortgage note when the original borrower lacks adequate income and credit score to qualify for the loan. The borrower may also need a cosigner if he simply wants to qualify for a better interest rate.