Peers are usually spouses or partners, but you can be a “co-lender” with someone you are not married to, such as a relative or friend. In this case, you are designated as a competitor. The relationship and process are basically the same as those of borrowers, but your lender will consider your separate finances by sending you and your co-applicant individual credit applications for the same mortgage. It is also possible to have a co-lender who does not live in the house for which the credit is — they are called non-borrowers. The addition of a co-applicant (or co-applicant, co-signer or guarantor) can be beneficial, as it could bring additional revenue and assets to the table. The combined income between the two of you can allow you to qualify for a larger amount of credit, as you can afford to pay higher monthly mortgages. A father, for example, could serve as a co-loan for a consolidation loan for his son. Applying to a co-borrower allows the son to qualify for the loan below his father`s top credit rating, while obtaining a low interest rate allowing him to repay other high-rate debts. Tax liabilities are possible if the primary borrower is not late. The lender will require the co-signer to pay the mortgage.
Since you probably have your own mortgage and large bills to pay, this could be difficult. You may see a debt cancellation that should be reported to the IRS and that would appear on your tax returns, not to mention a negative note on your credit report. Applicants with borrowers are more likely to obtain higher loan amounts because they pose less risk to the lender. Pro Tip: If you agree to serve as a co-buyer to allow a first-time buyer to purchase a home, you should establish a separate, legally binding agreement whereby the prime buyer provides refinancing authorization two years after the initial purchase. Keep the responsibility of the principal borrower to be able to terminate the mortgage, the deed and the title and the owner`s insurance according to the agreed time frame.