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hello everybody and welcome to another Real Estate's video this is Xavier V Danya the real estate youtuber in Phoenix Arizona helping you accomplish your home goals today's topic comes from a subscriber who actually left this comment a while ago however he really stuck with me and I think it's a really great idea especially now with people having to buy homes of down payments and bringing in co-signers and co borrowers so thank you for your question I think most people have a pretty good idea of how co-signing works when it comes to credit cards or car loans but for buying a home people think think it's a lot more complicated because now we're talking over a hundred two hundred three hundred thousand dollars worth of a loan instead of a little credit card but it has some similarities and some differences so today I'm gonna help break that down for you and your potential cosigner to kind of help you guys get started with your home buying journey you should not feel guilty if you need a cosigner some situations it's the what we have to do to get the job done so I've made a video on this channel it's specifically talking about what are the three things you need to buy a home if you haven't watched that video I recommend it before you watch this video however for those that watch that understand that there's three pillars or three things you need to do to qualify for a home one thing being your credit score the second thing being your monthly income or rather your employment history meaning you have to have at least two years of work history and the third thing is your debt to income ratio or in other words calculating your debts monthly obligations and minimum payments against your monthly income and making sure those ratios work for co-signing you need to make sure that one of these categories is 100% secure and that is your credit score you cannot it doesn't matter if you have a cosigner or not you have to meet at least the minimum credit score for whatever loan your qualifying for this means if you have a four hundred credit score and you're saying well let me just get a cosigner to help me out no that doesn't work in that case the cosigner we're buying the home for their in their name and I have to do with nothing with you so you need to make sure your credit is 100 percent solid so co-signing is more for people that have that good credit already they're already qualifying but there's something going on with your debt-to-income that doesn't allow them to qualify them for as much for example it could be two things it could be that they have a lot of debt a lot of credit card debt student loan debt and that's preventing them they make a decent income that's preventing their debt to income ratio to work out or actually qualify or sometimes they can't qualify but it's not for the purchase price they want or it's realistic in that market another thing could be you can be I have pretty low debts you could only have one or two credit cards and your debts could be pretty awesome however your income isn't quite there yet you're just something on your career you know you might not be making exactly as much as you'd like but because your income not too high and even though you have lower debts you won't be able to qualify for the home you want or a realistic number that you need for that price point so in these situations is when a cosigner would be needed not credit related reasons but for those reasons co-signing for a home loan can be broken down into two categories but before I break down those two categories I want to make sure that the co-signers understand the risk they're taking by co-signing and more importantly the requirements they still need first and foremost the same rule applies to what I just told you guys about the actual borrower if you're a cosigner or co-borrower whatever you're going to be you need to make sure your credit is up to par you can't come in even though if you have amazing income and you have very low debts you want to co-sign for somebody you can't do that unless your credit score is that the credit score's that's needed and you want to make sure that your cosigner that you're adding is actually gonna add something to the equation if you're trying to add a cosigner that has a lot of debt and their income ratio is really off then they're probably not gonna help you qualify for much more for a home however if you're adding a cosigner with a lot of income and not so much debt well that's definitely gonna put into your equation is gonna help you tremendously in addition to this you shouldn't expect them the person who you're co-signing forward to get an amazing program let's just say I'm buying a home and my dad's in a cosign for me and I have a 650 credit score and I've barely qualified my dad has a 800 credit score that's amazing and flawless well if he comes and helps me he shouldn't expect my loan program to not be amazing because the lender always uses the lowest credit score as the basis of their program and their interest rate on all that info and lastly understand that you're getting yourself into a financial burden this means that even though you might not be on the title or you're not going to be living there exactly yourself that's gonna be on your credit report so this affects you in two ways one if the person you're co-signing for decides to not pay their payments or they're late 30 days well it's gonna hurt their credit sure but it's also gonna hurt yours just the same a 30-day late 60-day late are really horrible things to have in your credit so please understand and fully trust the person that you're helping that they're gonna be able to a be able to pay on time or be have the confidence to tell you hey I don't think I can make my payment on time this month can you help me and you have to as a cosigner I'd be able to help them if that's the situation or have enough trust that you know that they will pay on time and it will figure out what they need to do to qualify for a home but also to affect you towards your future purchases so if you decide you want to buy a home a year or two year after you co-sign for somebody well that monthly debt of that payment that you co-signed for is not going to be part of your debt to income ratio if the ratios are really tight now you basically added this home mortgage to your debt to income so the odds are is if you try to buy a home on your own you probably won't be able to qualify anymore because you have this big monthly debt of that home purchase so the cosigner and the borrower need to understand that if you do want to buy a home in the future you need to either sell the home before you're ready to start buying or you need to refinance the cosigner out that way they can be able to buy in the home on their own and I'll have that monthly deadline so if you as a cosigner and the borrower understand the things I just told you about let's get to it one of the categories for co-signing is the non occupant cosigner this is a person that's co-signing for the borrower and it does not intend to live at the actual property so in this situation is that cosigner street is just the same as the borrower they need to have a qualifying credit they get their monthly incomes and their debts and they put them into the equation with the actual borrower so odds are you're probably including this cosigner because you need a little more income so if they have much more income and they're not adding too much debt to the equation with this non document cosigner you're able to kind of boost it up and qualify for a lot more the same applies it is still going to be their debt when buying the home but there are some situations when a non occupant cosigner is actually not on the title so the home itself won't be necessarily in their name I think there's an option for you to include that and most of the time they do that but I've seen some situations I don't know the change or not where they're not on the actual title of the property however the mortgage is in their name so just like I said before if the borrower decides to pay late or foreclose on the property it affects the cosigner and the borrower that's saying even though they cosigner doesn't live at the property it is also very important to note that as a in this situation when you're having a cosigner that's not living in the home you cannot qualify for downpayment assistance programs anymore this means you're probably gonna need your down payment and yes you could use the down payment from the actual non-optical cosigner if they want to help you with the down payment that's totally fine the second category is a tow borrower this means is that the person that's helping you qualify for the home is actually gonna live in the home so for example if I'm trying to buy a home and I can't qualify for the one I want well I can say hey brother or my sister or whoever coming by this home with me and we'll go live together in it well as long as we're both living together in it then we can that's classified as a co borrower you might say well it's not really co-signing all the way it is because you're using both incomes both the minimum hopefully debts and then both credit score's to buy a home and now they both have to live in it the good news with this option is you could qualify for downpayment assistance in this situation as long as both of them are first-time homebuyers and both of them have the right credit etc etc so this is a good situation for maybe I've seen a lot of people who don't get married nowadays nothing wrong with that at all in this situation they would both be Co borrowers they're both buying the home together to qualify for that house don't even get any ideas of trying to do that or saying they're gonna live with you and actually have them not because that's a federal offense and please don't mess around with that FBI checks that out and it's scary so if you do do this option though and you're buying with somebody that you don't 100% trust is keep in mind down the road and you sell the home you're both on title so if one of you guys wants to split or you guys want to sell the home or it's 50/50 so you guys have to arrange and make sure you're going into it with somebody you trust because you're both basically essentially buying the home now I'm saying to people but it could be more than two it could be three or four I hope that does a good job explaining everything for you guys if you have any questions give me a call my contact information is below you can find my website at Xavier V Dania Comrie can learn a little more about me and you can actually scroll down and start browsing some homes if you're in the Phoenix Arizona area and if you're not in Arizona and you're looking for a realtor there's a link down below as well where you can fill in your info and I potentially may know in the realtor in your area that's great if I don't know one give me about a week week and a half and I can find you a decent one so if you guys have any other questions please let me know and I think that's about it for today once again thank you so much for the Lizzie Holford team at guild mortgage specifically Alejandra who took the time to understand all this their information can also be found below so there Lizzie I think she makes videos once in a while so you can go down there just after her and I think that's it guys thank you guys so much for your time hope you have a great day [Music] you