How can I get a mortgage with bad credit cosigner?
Mom's Answer: I am thinking that you have a good credit co-signer and you are the one with bad credit. So I will answer your questions with that in mind.
This is an often used with friends and family. The person with the good financial history co-signs a loan with the person that has not-so-good financial history.
There are both pros and cons to this, not really a right or wrong.
Pros: you get the loan you want and are responsible for paying it.
Cons; the cosigner gets a loan they don't want and are responsible for paying for it.
You really have to keep that in mind. The person helping you out is not just a name on a piece of paper but has full financial responsibility of the debt.
If they are willing to assist you and take on that risk, that is a good deal for you.
However, you better not mess up because not only is your credit at risk but now you have involved them and their credit is just as much at risk as yours.
For the co-signer, this also shows up in their debt ratio if they decide to get a loan for themselves it may prove difficult because your loan is on their report.
Sometimes creditors will accept a letter from you stating that you are fully responsible for the payment.
Bottom line: it is a great option for you but not so great for your friend or family member trying to help you out..... you better treat them well.
More info at Getting a Mortgage with Bad Credit