Co-signers may be the ticket!
For many homebuyers qualifying for a mortgage may not be possible. Either the potential borrower does not have an income for the mortgage by itself or they have debts that on their own are equal to a mortgage payment. Since the people with the big bushel baskets full of money want to feel good about who they lend money to they have something called a Debt to Income ratio. If your ratio of debt is so high that the lender would not approve the mortgage there is still hope.If the borrower can get a friend or relative to cosign the purchase documents and the combination of all the borrowers income and debt is such that the ratios are within reason most lenders will approve the mortgage.Now this all sounds rather simple, and to a mortgage professional, it is simple, but there are still more items to hurdle prior to obtaining that final approval from the lender. The first item that you need to know about has to do with all of the borrower’s credit scores. If the scores are high enough we can proceed on to the next item. If the credit scores are low, especially if it is the co-signers score, maybe it is time to look for another co-signer.The second item to look at is the amount of down payment coming from the borrower occupant. If the borrower has at least five percent of the down payment, and those funds can be documented, and in the possession of the borrower for at least three months we are a step closer to mortgage loan approval. If the borrower does not have the five percent then we must look at a limited number of mortgage programs. FHA mortgages come to mind right off and FHA mortgages not only allow for co-signers but they allow for the down payment to come from documented cash gifts. If you need an FHA mortgage be sure to obtain an approved Gift Letter from your mortgage professional as it has all the necessary language for an Underwriters approval. The next item that both the borrower and all of the co-borrowers need to know is the liability of this type of mortgage. If the agreement is that the borrower will pay all of the mortgage payments but fails to do so all of the people on the mortgage will be penalized. The failure to pay or failure to pay on time will negatively affect all involved credit scores. So if you are a co-signer be sure you are confident with the character of the person you are backing, as it just may be the cause of some future problems. And the last item for you to know about is that obtaining a mortgage using co-signers is a common and every day occurrence. For a full time experienced mortgage professional it is a simple process. So ask your mortgage professional for guidance, after all you are paying them for their expertise.For answers to your mortgage related questions call Bob Kieber at (970) 262-1199 or e-mail him at firstname.lastname@example.org.Bob is a local mortgage lender and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country.
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