Co-signing for a Kansas City home loan is when another individual and yourself jointly apply for and carry a primary mortgage. This concept may sound simple, but getting a loan with someone can be quite complicated. Signing for a loan is a long-term, legally binding agreement with another person, the lending institution, and other organizations like the title or escrow company. That being said, there are risks and benefits to being a co-signer on a Kansas City home loan. Before co-signing for a loan, be sure to consider:
- The strengths and weaknesses of your home loan partner
- What kind of loan you are co-signing for
- Your various options as a co-signer
Why Co-signers Are Important
Many people need a co-signer in order to get a mortgage. A co-signer is someone guarantees your promise to the lender to make payments on a property. Co-signing for a mortgage provides borrowers with additional options for buying or refinancing a Kansas City home loan.
Characteristics of a Good Home Loan Partner
If you are considering becoming a co-signer for a Kansas City home loan, make sure your future partner possesses the following traits:
- On-time payment history
- A good to excellent credit rating
- Low debt-to-income ratio
- Stable employment and income
These traits lessen the chance of your home loan partner defaulting on their loan, which cause serious consequences to your financial standing.
If you are married, you will most likely co-sign for the purchase of your spouse’s home. Parents and family members are often co-signers as well. It’s essential to sign a Kansas City home loan with someone you trust and who trusts you. Some people choose to write up a contract, specifying rights and responsibilities such as who will:
- Occupy and take care of the property
- Pay the bills