If you're considering co-signing on a mortgage here are some things to think about. Though it's a nice to help someone who cannot qualify on there own, you do need to assess your own situation carefully before proceeding. Co-signing for a mortgage can have an impact on your financial future.

Whether or not you are the principal borrower, the co-borrower or the co-signor, if your name is on the contract then you will be 100% responsible for the debt of the entire mortgage amount. Although it’s looked at as if you're somehow removed from the actual mortgage you do, in fact, have the same legal obligations as all the borrowers on the mortgage.

If the borrower cannot make a payment, or several payments, you'll be expected to make them on their behalf. If there are missed payments, then the mortgage goes into default and the lender will be forced to take legal action. If this circumstance occurs it will impact your credit score negatively. Trusting the applicants and having a way to monitor that the payments are being made are two of the biggest things to ensure when co-signing on a mortgage.

Co-sign Until The Borrowers Can Qualify To Have You Removed

Once the first term of the mortgage is complete, the co-signer is not automatically removed from the mortgage. The primary applicant will submit a new application and if all goes well, will qualify on their own merit for the remaining mortgage amount. If they don't qualify, you'll remain on the mortgage for the next term.

Before co-signing, a conversation should always take place that clarifies how long your name is expected to be on the mortgage. Having a detailed and thorough conversation with the primary applicant and your mortgage expert will help precisely outline the expectations for everyone involved.

Co-signing For A Mortgage Will Impact Your Debt To Service Ratio

When co-signing, all the debt of the mortgage you’re co-signing for will be counted on your debt to service ratio calculation. If you happen to want to qualify for another mortgage in the future, you will have to include the payments of the co-signed mortgage even though you aren't the one making the payments directly. You want to have a clear vision of your future home and the length you plan to reside there before you think about co-signing for anyone. If they don't qualify or have a change in employment it could be substantially longer than expected before they are able to qualify on their own and have you removed.

Co-Signing A Mortgage Means Helping Someone Get Ahead

While there are certain things to consider when agreeing to co-sign on a mortgage application, chances are you’ll be greatly helping someone you care about get ahead in life and helping them invest in their financial future. If you have any further questions about co-signing on a mortgage, speaking with one of our mortgage experts at CME will help you decide what is best for you. We are here to answer any questions you have as well as give you a clear idea of what you will currently qualify for in todays market.