Should You Get a Co-borrower on your Mortgage?

A co-borrower is someone whose name is on loan documents along with yours and is equally responsible to repay the loan.

Being a co-borrower, however, isn’t the same as being a co-owner. Joint ownership has to do with how the property is deeded, which is separate from the mortgage transaction. The co-signer does not have a financial interest in the property either, they cannot borrow against the house the way you could as an owner or profit from its sale. The co-signer doesn’t have to put any money upfront and is only liable if the borrower defaults.

Having a co-borrower is the best option if the primary borrower’s income is not sufficient to qualify on his/her own. Applying together will likely increase the chances of qualifying for a larger mortgage and lower interest rates.

Here are a few of the benefits:

As the borrower makes payments, both parties might strengthen their credit scores.

The co-signer doesn’t have to make regular payments.

The borrower enjoys sole ownership of the property.

Here are a few of the considerations:

If the borrower defaults, the co-signer assumes all financial obligations without any rights to the deed.

If the borrower defaults on the loan, the co-signer’s credit score and cash reserves may suffer.

Making the decision to add a co-borrower to your mortgage all depends on your circumstances and level of comfortability.