How Does Co-Signing Affect My Ability To Qualify For A Mortgage Loan?

If you can find a cosigner for your mortgage, come programs include FHA loans and conventional mortgages, you could potentially qualify for a larger purchase price by taking on larger payment on a monthly basis. The other person has to provide a letter of explanation to the lender explaining specifically why they are willing to cosign for you to take on a larger mortgage.

Few things to be mindful of:

  • You’re ability to make timely mortgage payments is crucial as it becomes the potential problem of the cosigner in the event you skip a payment or for whatever reason are unable to make the payment worked the payment becomes late etc. In other words the other person’s credit is negatively affected in the event the payment is not made. This other person is literally 50% responsible for the obligation even though you are the one making the payment.
  • Cosigning does not always benefit you especially if the other person does not have any additional income to help you increase borrowing power to offset the liabilities associated with taking out the new home. For example of first-time home buyer wants to have his grandmother cosign to help him purchase a home, unfortunately because grandma is retired and is only on Social Security income while she might be able to get additional money for a down payment having her on the loan as a cosigner probably wouldn’t help us for is providing additional income to offset the housing payment liability.
  • Your choices shape someone else’s chances-let’s say you’re cosigner wants to purchase a house down the road themselves. You make the mortgage payment on your home that they’ve cosign for you years earlier. You will have to refinance that person off the loan so they can qualify for a loan themselves which basically means you should keep your credit in pristine condition because otherwise your choices subsequently prevent your cosigner from being able to qualify for something themselves when they did you favor in the first place by cosigning on your mortgage.

If the cosigner in you are in full agreement that they will cosign for you to help you take on a larger monthly mortgage payment, then the rewards of purchasing a higher priced home are certainly within your grasp. The cosigner will certainly have to qualify with full income including providing tax returns, W-2s and  pay stubs as well as have acceptable credit it reaches 620 credit score or better, hopefully better and of course funds available for reserves. Cosigning can certainly bridge the gap between qualifying and subsequently not qualifying for loan, the cosigner doesn’t even have to live with the property or purchasing, but they have to be in full agreement and provide all of the financial documentation that you would put a letter to consider them as a worthy co-applicant.

If you are in a cosigner situation, or are trying to get out of a cosigner situation and looking to take out a new loan or see what having a new loan could do for you, contact Scott.Sheldon@nafinc.com today!

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RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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