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Co-signed mortgages

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Updated: 3/24/2003 4:46 pm
If you're finding it difficult to qualify for a home loan on your own because of lack of a credit history or a blemished one, one option you might consider is a co-signed mortgage. This type of mortgage requires that someone with an established or clean credit history guarantee your debt for you. This means if you fail to pay your monthly mortgage payment, your co-signer is fully responsible and liable for the delinquent payments. For this reason, co-signed loans should be approached very seriously. You might begin by asking your parents, siblings, other close relatives, or friends if they will co-sign. Be absolutely certain that the person you pick is financially able to assume all the responsibilities that can come if you default on your mortgage. For example, in order to save your house from foreclosure, he or she may be forced to take over the rest of your payments for the remainder of the loan. If payments are not made to prevent foreclosure, the co-signer may still be liable to pay a balance if proceeds from a foreclosure sale don't cover the loan amount and the lender's expenses. Finally, remember that co-signed mortgages will appear on both you and your cosigner's credit reports. So, if you default on a co-signed loan, you could greatly affect your co-signer's chances of obtaining his or her own mortgage in the future.

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