Skip to main content

Will Your Chicagoland Mortgage Co-Signor Deliver Magic?


Will Your Chicagoland Mortgage
Co-Signor Deliver Magic?

     More and more often, the topic of co-signing on a Mortgage is being brought up both during my initial inquiries and Pre-Qualification conversations.  I'm presented with questions regarding Mortgage co-signing from both hopeful recipients of the co-signing and those actually considering becoming a co-signor. 

     I find that there is often confusion surrounding this topic.  (Some simply have co-signing confused with co-borrowing.    Two different things.)  And many times, recipient and co-signor alike are unsure of the true benefits and responsibilities attached to the act of co-signing(For a prior post on the topic of parents considering co-signing, click HERE.)

     Co-signing is being considered in a growing number of scenarios.  The situations I see as a Mortgage Lender most often surround hopeful Home Buyers with low *Credit Scores. Credit Scores so very low that the hopeful Buyers are unable to be approved for financing on their own merit.  Or young Home Buyers that have not yet established enough credit history. (*Contact me for info on credit score guidelines/mortgage program availability.)  

     It's quite common to hear my Mortgage applicants talk of their co-signor as something of a magician.  When we speak during their initial mortgage consultation, they think the co-signor's good credit is going to deliver a Mortgage Approval for them something like a magician delivers a rabbit out of a hat.  "Wa-La!"  We're approved! 

      They believe that a willing co-signor with good credit will balance out their bad credit on their Mortgage Application.  

     Unfortunately, it doesn't work like that when applying for  Mortgage loans.  Regardless of job history, income, or down payment ability, anyone and everyone applying for the Mortgage must credit qualify to be on that Mortgage.  The rules are firm and clear on that.

     So what does this mean to you as a Mortgage Applicant when this problem scenario arises?  What options can you still consider should you hope to proceed with buying a home?

     Much depends on your credit and financial situation.  Options can exist though.  One possible solution can be that your co-signor becomes the sole buyer of the home considered for purchase.  Your co-signor seeks a mortgage on their own.

     When your co-signor makes application for their mortgage, the property is then considered an "investment" property (when they are a non-occupant).  As an investor seeking financing, they'll be required to place a larger down payment on the purchase.  In most cases, the down payment will be at least 15%.  They'll be required to qualify for a Mortgage on their own financial merits and credit scores. (Note:  Interest Rates on investment property financing are typically higher than those for buyer-occupied properties.)   

     Should your co-signor agree to move ahead with this purchase/investment, you (the initial Buyer) become the renter.  Most likely you'll then pay the co-signor's incurred mortgage payments via your rent payments to them each month.   

     What I've found is that many times written agreements are put into place between co-signor/investor and the initial Buyer during these types of scenarios.  And often, the co-signor's financing is viewed as only temporary while you, as the renter/initial Buyer, work on improving your credit scores. 

     When your credit is improved (or has grown) sufficiently to the point where you can successfully obtain your own mortgage, you then buy the home from the co-signing investor ... or the investor and you Refinance the Mortgage into both of your names.

     The bottomline is:  No two purchase scenarios, co-signing, or financing scenarios are the same.  Take the time to consult an experienced and knowledgeable Mortgage Lender regarding your buying and financing needs.  Take this action well prior to starting your home search.  That will allow you ample time to grow your credit history, correct, repair, or investigate all the financial options open to you for purchase. 

     Will Your Chicagoland Mortgage Co-Signor Deliver Magic?  Scrambling to find a willing and capable co-signor after you have found the home of your dreams is extremely stressful.  Don't do that to yourself.  Contact me now to discover all the buying and financing options available to you.


     * Hoping to Buy a Home or Refinance in one of the Lincoln-Way Communities, Will County, DuPage County, or elsewhere in Chicagoland?  Contact me!  I'll put my 36 years of mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:
Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281
Click HERE for a Free Mortgage Consultation!
Ready to Apply for your Chicagoland Mortgage?
  
*  I try to answer or communicate with each client and Referral Partner as quickly as possible upon receiving a call, email, or contact.  Should you not receive a timely response, please ... know that I am with another client or within a Closing at the time.  Please ... try again or through another manner.  Your business is very important to me.  Thank you!
 
 Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   Digg Acct. of Gene Mundt, Mortgage Lender
 Trulia Acct. of Gene Mundt, Mortgage Lender   Zillow Acct. of Gene Mundt, Mortgage Lender   Lender411 Acct. of Gene Mundt, Mortgage Lender    Klout Acct. of Gene Mundt, Mortgage Lender    Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender  
- See more at: http://activerain.com/blogs/genemundt#sthash.9DVq3wmI.dpuf


*  I try to answer or communicate with each client and Referral Partner as quickly as possible upon receiving a call, email, or contact.  Should you not receive a timely response, please ... know that I am with another client or within a Closing at the time.  Please ... try again or through another manner.  Your business is very important to me.  Thank you!
 
 Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   Digg Acct. of Gene Mundt, Mortgage Lender
 Trulia Acct. of Gene Mundt, Mortgage Lender   Zillow Acct. of Gene Mundt, Mortgage Lender   Lender411 Acct. of Gene Mundt, Mortgage Lender    Klout Acct. of Gene Mundt, Mortgage Lender    Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender  
- See more at: http://activerain.com/blogs/genemundt#sthash.9DVq3wmI.dpuf
    


    

Comments

Popular posts from this blog

Property Addresses: Gettin' Down to the Nitty Gritty

Property Addresses:   Gettin' Down to the Nitty Gritty

Take just a second and read through the following statements ...


“The devil is in the details” 
... "in life, it is often the tiny details that end up 
being the most important"

"Get Down To The Nitty Gritty"

“Little details have special talents in 
creating big problems!” 

“Sweat the details”

"Success is the sum of details"

Details ...Details ... it's all about the details ...
     And I'll admit it, I'm a bit of a nerd about them.  My whole family is.  Details, the intricacies, the little things ... they matter to us.
When I was growing up, a typical conversation (and argument) between my brothers and myself at the dinner table or in the backyard centered around "details".  It didn't matter what the topic was, it was the minor differences ... the details about the topic ... that we argued about.  I'm sure we drove our parents crazy.  
Sports statistics and games ... minutiae rega…

Ready for Fall? It's Arriving Soon

Ready for Fall?  It's Arriving Soon

Friend ...

Maybe it's because football season has started. Maybe it's the kids being back in school. Or because the night air is cooler. But a sense of Fall has arrived here in Chicagoland ...

The Fall Season brings changes with it. Changes in temperatures. Changes to the clothing we wear. Our focus seems to shift with the coming of shorter days, falling leaves, and crisp air.

Fall can be the perfect time to do a multitude of things. You can prep your home for the upcoming winter weather ... or for Fall listing and sale. 

But whether you're moving on or staying put, Fall is a great time to declutter and organize your home inside and out ... and your finances too.

I've googled like crazy to find interesting articles filled with Fall info, ideas, tips, and photos. Articles that will help you usher the Fall Season in at your house. I hope you enjoy reading the articles offered below and that they inspire you to make any needed changes.

Rem…

Paper or Paperless billing? Which serves YOUR needs best?

Paper or Paperless billing?  Which serves YOUR needs best?


These days, companies are under pressure to go "green" and become more environmentally friendly.  As a result, an increasing number of businesses are offering their customers a paperless option with which to receive and pay their bills. 

There are obviously many positives to be found within these paperless services:


Trees are saved  Reduced postage costs  Less paper documentation to organize or save/storePossible rewards for switching to paperlessPayments can often be made/posted same-dayAutomated payments can be set-upMore
But I can tell you from my vantage point as a Chicagoland/IL/WI Mortgage Originator, there are also negatives to be found within paperless methods.  For some of my mortgage clients, the choice of going "paperless" just hasn't worked well.

 For some, an email or text reminder regarding payment of bills has not been enough. They NEED a paper billing to arrive in their mail. 

Their paper bil…