How to Find a Cosigner for a Home
Unless your credit rating, employment history, income and debt ratios satisfy lenders, financing a home can be difficult. One option available for a potential home buyer is to find a cosigner. While not all banks accept a cosigner, many will. Some lenders require that the cosigner be a blood relative or a spouse. Cosigners will be obligated to make the loan payments if you, as the primary borrower, fail to make the payments as agreed. Some investors are willing to cosign a loan for home buyers for a fee. The best cosigners usually are trusted family members who want to help. Close friends able to take the risk are another option.
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Instructions
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Call various banks about financing. Find out if they accept cosigners.
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Obtain information from your chosen lender about the qualifications required for a cosigner. Inquire about restrictions. Find out whether the cosigner has to be a blood relative. A cosigner must be creditworthy to qualify for the loan. That means he must have an acceptable credit score, debt-to-income ratio, job history, income level and other qualifications required by the lender.
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Make a list of possible cosigners based on the cosigner qualifications the bank provided. Consider friends and family first. Narrow your list based on the ability of the cosigner to take on the financial responsibility. Delete people from your list who are not in a position to take a financial risk, such as elderly relatives on a fixed income or people with limited financial resources.
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Collect all your financial paperwork. Call the first person on your list of possible cosigners to discuss the possibility of cosigning for you on your home loan. Be prepared to disclose personal details about your income and credit rating so the potential cosigner is aware of the risks.
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Select an attorney to prepare a contract to be signed by you and your cosigner. Talk to your friends and business associates to get referrals for a reliable real estate attorney. Call several attorneys to question them about their experience with cosigner agreements. Obtain fee information.
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Meet with your chosen lawyer and your cosigner to discuss the terms of the agreement. Sign the paperwork. Keep a copy of the agreement in a safe place.
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Meet with the loan officer with your cosigner. Fill out the paperwork. The cosigner must complete the same paperwork as the borrower. He is also applying for the loan and must provide documentation to verify his income, assets, credit and job history.
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Keep your cosigner informed about the closing date and any material he needs to furnish to the lender to get loan approval. The cosigner will have to sign some paperwork at closing.
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Meet at the closing table. Sign the necessary documents.
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Tips & Warnings
Getting a cosigner agreement in writing is important, even when dealing with close relatives and friends.
There are some individuals and companies who will cosign for you for a fee. This strategy should be used as a last resort and with extreme caution. Be sure you have a trusted attorney to navigate this situation to be sure you are protected.
