{"id":1530,"date":"2022-11-25T12:00:21","date_gmt":"2022-11-25T17:00:21","guid":{"rendered":"https:\/\/www.realtyhop.com\/mortgage-center\/?p=1530"},"modified":"2022-11-22T15:20:48","modified_gmt":"2022-11-22T20:20:48","slug":"should-you-use-a-co-borrower-on-a-mortgage","status":"publish","type":"post","link":"https:\/\/www.realtyhop.com\/mortgage-center\/should-you-use-a-co-borrower-on-a-mortgage\/","title":{"rendered":"Should You Use a Co-Borrower on a Mortgage?"},"content":{"rendered":"

Adding a co-borrower to a mortgage application can benefit home buyers in several ways. A co-borrower with strong credit<\/a> has the potential to boost your chances of getting approved or qualifying for lower interest rates. Showing additional income on an application can also help lenders approve a larger loan amount.<\/p>\n

Bringing in a co-borrower may make sense for your home purchase, but before committing to this type of arrangement, it\u2019s crucial to make sure all borrowers understand what\u2019s involved and how it affects the ownership of the home.<\/p>\n

What is a co-borrower on a mortgage?<\/h2>\n

When an individual applies for a mortgage, the lender evaluates their ability to pay off the loan using their financial information. But in many cases, more than one person contributes to a home purchase. When two or more people apply for a mortgage loan together, the lenders may consider them as co-borrowers.<\/p>\n

A co-borrower agrees to accept joint responsibility for the mortgage loan repayment. Married couples sharing home ownership often apply for a mortgage as co-borrowers. Typically, when the home purchase goes to settlement, both co-borrowers will own the house, and lenders will require both names on the title to the property.<\/p>\n

Examples of co-borrowers include married couples, unmarried couples, or parents and children. Co-borrowing arrangements are common among home buyers, and lenders often have fairly set rules or guidelines they follow in these situations. In 2022, married couples accounted for 61% of recent home buyers, according to the National Association of Realtors (NAR<\/a>), down from 66% reported by the Consumer Financial Protection Bureau in 2016<\/a>. The NAR further reported that unmarried couples now make up around 10% of home buyers, the highest rate they have ever recorded. <\/p>\n

Co-borrower requirements<\/h2>\n

Lenders consider both co-borrowers\u2019 credit histories and income during the approval process. The double income helps borrowers qualify for a larger mortgage loan because both individuals will contribute to the loan repayment.<\/p>\n

A co-borrowers\u2019 good credit will also improve your chances of approval. Conversely, if a co-borrower does not have good credit, they may lower your chances of approval. In these situations, you should weigh the pros and cons of the additional income against their less-than-stellar credit history before adding them to your mortgage application.<\/p>\n

Co-borrowers should prepare to participate fully in the mortgage approval process. Each co-borrower can expect to complete the following steps:<\/p>\n