Mortgage Blog

Co-Signing Solutions for Mortgage Pre-Approvals

March 11, 2019 | Posted by: Brandi Pierik and Matthew Pierik - Red Deer and Calgary Mortgage Brokers

With tightening mortgage guidelines, a Co-signer may be a good option!

A Co-Signer May Offer the Boost You Need

Sometimes, a mortgage applicant may need a little extra help in order to qualify for the loan amount required to get into a new home.

If you’re having trouble meeting traditional lender mortgage guidelines thanks to the tightening of qualification rules, due to poor credit or because ‘life happened’, you may benefit from having someone come on the deal as a co-signer to help you qualify for a mortgage.

If you simply can’t afford the home you’d like to purchase, it’s likely in your best interest to take another look at your financial situation and perhaps set your sights on a more affordable property.

But if having a co-signer is the boost you need to qualify for a mortgage on a home that’s within your means, it can be a great solution.

What are my options?

When looking for a suitable co-signer, it’s important to consider someone who compliments what you’re currently lacking in the eyes of lenders. For instance, if your issue is poor credit, you want to bring a co-signer on board who has healthy credit. Or, if your income is preventing you from qualifying on your own, you’ll want to find a co-signer who has a strong income.

Co-signing can work a couple of different ways:

1. The co-signer becomes a co-borrower. The co-borrower fills a similar role to that of a partner or spouse who’s buying the home with the primary applicant. Basically, this involves adding the support of another person’s credit history and/or income to the application. He/she is put on the title for the home and lenders consider this person equally responsible for the debt should the mortgage go into default.
2. The co-signer becomes a guarantor. The guarantor is backing the loan and vouching that you’ll pay it back on time. He/she is responsible for the loan if it goes into default.

The most commonly accepted co-signors are parents or other close relatives, and more than one person can co-sign a home loan. The lender must feel comfortable that the co-signer(s) will help lessen the risk associated with loan repayment.

Have questions about mortgage qualification, co-signing options, or your Red Deer mortgage in general? We offer the best mortgage rates and strategies! Answers are just a call or email away! Contact Brandi Pierik, Dominion Lending Centres, Red Deer Mortgage Broker. 403-588-8657

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