Co-signing a mortgage can be a risky propositions make sure you know what you are getting yourself into.
Co-signing a mortgage carries with it a lot of implications. It impacts can follow you for years to come. It can affect your personal credit and your ability to get additional credit when needed. Remember that when you are asked to co-sign a loan you are being asked to take a risk a lender will not take.
By co-signing a loan you are guaranteeing the debt. That means if the primary borrower fails to repay the outstanding loan balance then you are responsible for the repayment of the loan amount. In this instance it is important to ensure that you can afford the additional payments if necessary. It could also mean that if the primary borrower cannot repay the loan you could be responsible for any outstanding balance, penalties late fees and collection costs that have been accumulated as a result of the and default.
A benefit to the creditor is that they can go directly to you without attempting to collect any penalties or outstanding balances, without ever approaching the primary loan holder. They can use the same collection methods with the co-signer that they would with a traditional mortgage holder. That means they can sue you, garnish your wages as well as a host of other techniques to collect the outstanding balance.
If you do co-sign a mortgage despite the risk involved, be sure you can carry the cost of the loan payments. Remember that creditors will see a co-signed loan as a personal liability and this may prevent you from receiving additional credit of your own. Ensure that you understand all the consequences of co-signing for any loan.
It will also be important to take some precautions concerning the debt. Ask the lender to inform you personally if a loan payment is missed. That will give you time to make arrangement to repay the back payments and penalties before it becomes an overwhelming issue. Make sure you get copies of all of the documentation involved with the process; you may need these in the event that there is a dispute over the loan in question.
Ultimately it will be your choice whether you co-sign a mortgage. Check with your local governing body to find out what implications and protect there are for co-signers. Make sure that either the lender or the borrower provides you with all the loan documentation. Finally be proactive in monitoring the repayment of the loan.
