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notice what did i say on time if they're not paying on time you have obligated to cover that debt and that will absolutely be considered in your debt ratio this video is going to be helpful to you because if you're considering co-signing a mortgage loan for somebody this is information that you've really got to know it's critical it's crucial do not cosign without watching this video and then making sure you're asking all of the very important questions before you sign on that dotted line so hang through to the ends and i'm going to give you all the scoop welcome to your one stop shop for anything and everything mortgage education i drop new videos every tuesday and saturday my name is stephanie weeks and i'm so excited and so passionate about being a loan officer i've actually been doing this for 17 years and there are over 300 000 loan officers in the nation in the past several years in a row i've actually been recognized in the top one percent of loan officers for production and in addition to that i've actually been named for the first time last year for 2019 in the scotsman guide of top originators very exciting so i do know what i'm talking about i love this information i love this stuff and i am eager to share it with you you know when you're starving and you go out to eat and the appetizers are cool but like you really really want to get to the meal let's dive into the meal of this video today cosigner first of all a borrower is very self-explanatory it's the person borrowing on the property because i'm talking about mortgage loans today not auto loans or anything else so a borrower is a customer basically that is financing a property and they are the borrower on the loan in some instances people need or want for some reason a cosigner one thing that's very confusing is that a uniform residential loan application is a standard form so if my borrower is filling out the form and they have borrower and co-borrower right they fill that out just as a standard form the co-signer that may come in to play they're going to get their own uniform residential loan application which is identical so that loan application it's not going to say cosigner it's not going to say co-borrower you're actually going to complete that section as borrower on that document but the way the loan officer puts the file together and submits it with all the notations that you're in in fact the co-borrower in that in that situation and some of the questions that you answer on that application are also going to help to indicate and validate your co-signer and not a co-borrower or not a borrower hopefully that makes sense that does confuse a lot of people the co-signer is not the borrower they are the co-signer they are agreeing to step up and guarantee that loan to be repaid if the borrower does not i actually had this question come up yesterday from someone that's in another state that i'm not covering and they had a bunch of questions around this it's very simple if you co-sign for someone and that mortgage payment is a thousand dollars a month and they're late on that payment it's gonna mess up your credit just like it's gonna mess up theirs if they default on that loan it's going to mess up your credit just like it's going to mess up theirs if they're late or they default the purpose is they shouldn't be late or default because you should have an agreement with them that if they're going to be late they need to call you immediately because you're going to have to make that payment to make sure that your credit is not adversely affected but i've seen in so many cases where that phone call is not made and that payment is late sometimes more than once sometimes multiple times in a row sometimes sporadically and that cosigner's credit is greatly affected by that and the same token if they default on that loan and that loan becomes due and payable hundred thousand dollars in this example then you're agreeing to pay a hundred thousand dollars it's very simple it is not a small thing to agree to co-sign a mortgage for somebody many people wonder if the co-signer has to be on title and have ownership in the property if you choose to go that route and co-sign for someone or obtain a cosigner if you're the borrower it actually varies by loan type sometimes they can be on title but don't have to and sometimes they must be on title it's going to depend on a number of factors you're going to have to discuss that directly with your lender for those exact details for your specific scenario don't forget to ask i think those are hugely hugely important questions so don't forget to ask those a cosigner does not fix bad credit or overcome bad credit so if your lender requires a 640 credit score as an example and you have a 620 your answer is not can i get a cosigner because you still have to meet the minimum criteria of the score itself to be able to proceed and get a cosigner you probably might go well then what the heck's the purpose again it's not to fix credit it maybe is to help offset negative credit but not overcome a score requirement sometimes it's also to bring some assets to the table maybe because the borrower doesn't have enough money that's needed to be verified so a cosigner might come in if they don't want to be a donor and do a gift a cosigner might come in and cosign because they have a lot of assets so they make the file stronger and maybe approvable versus denied another reason is it could help to offset a debt to income ratio let's say that you have a ratio of 60 percent and you bring in a cosigner what's going to happen is all their income and all your income comes together all their debt and all your debt comes together and you get a combined ratio so while your debt ratio might be 60 and it needs to be 45 potentially when you combine it all together and add that cosigner maybe now the overall debt ratio is 40 and that might make the difference between approval versus denial another example that happens a lot and also has to do with debt to income ratio let's say if you switched jobs and let's say i'm going to give you just a couple of examples there's there's so many examples i'm just going to give you a couple let's say that you've been a nurse and you've been a nurse for five years and you decided to go travel nurse and you've only been travel nursing for less than two years less than 18 months let's say maybe six months it seems crazy but because you now don't have a set schedule or a two-year history to figure out what you're likely to make when you travel how often you choose to travel all that kind of stuff you might not be able to get credit for any income so you might meet everything else on the loan looks great but you can't get credit for income a co-signer could come in and help that situation another similar exam similar example you've worked for car dealerships and you've either gotten like a guaranteed not a draw that's different you've either gotten like a guarantee or a salary and now you have this great opportunity you can make so much more money and you're gonna switch to commission and again it's not been two years it's not been 18 months maybe it's just been a year maybe it's just been a couple of months but when you are 100 commission it's the same thing what are you going to make and the only way to determine moving forward is to take and analyze the past which is typically deemed as a two year average so those would be another couple examples of where cosigners might come into play does being a co-signer affect you the cosigner when you go to get another loan it is case by case i know it probably drives everybody crazy when i say that but that's how lending goes it's case by case i'm going to give you the general answer the one that if you go with this answer it's probably the safest and you can't go wrong but there are exceptions let's say i'm the cosign let's say that i cosigned four months ago and you've made three payments now i'm going to get a mortgage because only three payments have passed we haven't seen a stable history only three payments have passed that you have made directly to the mortgage that i haven't made that mortgage payment for your mortgage that i co-signed is going to be counted in my debt ratio and affect me when i go to get another house let's give you one let's look at another situation though another example let's say that it's been 12 months or more i'm the co-signer i'm going to get a mortgage for myself it comes up on my credit i explain that i'm the co-signer not the borrower that can be validated through the credit bureau it can be validated through the loan closing documents and then i can say look it's been open for more than 12 months and we can prove through bank transfers bank checks automatic payments that the borrower paid the mortgage directly had nothing to do with me the money did not come through me paid that mortgage directly for the last 12 months and on time in that case it won't be counted against my debt ratio almost always notice what did i say on time if they are not paying on time you have obligated to cover that debt and that will absolutely be considered in your debt ratio i always love to offer a free gift or free download so the free download for today is going to be a free copy of a pdf version of my book best selling book called mortgage piece everything you need to know about mortgages in a quick and easy read of one hour or less hope you enjoy it and please also share it with your friends and family i love engaging with everyone if you feel like this video has been very helpful please type in all caps y e s in the comments that's y e s if you would consider being a co-signer after watching this full video if you enjoyed this video please subscribe to the channel if you haven't already also hit the bell to be notified remember i drop videos every tuesday and saturday be sure to dm me with any questions i love communicating with everyone and i love to also connect on social media my insta handle is underscore the real stephanie weeks and i also have a website stephanieweeds.com