You are a newlywed couple in your late 20â€™s with decent jobs, respectable income, and reasonable credit.Â Youâ€™ve started your search to buy a home in Brooklyn, but when you walk into the bank to pre-qualify for a loan, to your surprise, you find outâ€¦ NOT!
Youâ€™re not alone. The Federal Reserve studied the problem, and found that in the three years between 2009-2011, just 9% of youngsters between the ages of 29-34 were able to qualify for a first-time mortgage. It had been 17% only 10 years earlier.
Itâ€™s no wonder that many have sought alternative financing routes to buy a home, which is why mortgage co-signing is becoming more and more common. Yet before buying a home in Brooklyn via this route, itâ€™s important to have the consequences â€“ good and bad â€“ squarely before you.
The big one is obvious: a Brooklyn mortgage co-signing may be the only way to buy a home. Importantly, it can also help you secure a better interest rate and the lower monthly mortgage payments that entails.
Once you start making your mortgage payments regularly and on time, a co-signed mortgage can start to help you build (or rebuild) a strong credit rating.
A mortgage co-signing may help you buy a home in Brooklyn, but it also has immediate and major impacts on both your and your co-signer's credit. Late payments would affect your co-signerâ€™s credit rating as well as your own. The possibility of adding extra stress to important relationships is potentially very real, since a mortgage lender will attempt to collect payments from your co-signer in the event of a default.
The bottom line?Â Buying a home is a big step; if you require a co-signer to get approval for a loan in Brooklyn, itâ€™s important to make sure it is part of a sound long-term financial strategy.Â Iâ€™m here to supply the real estate expertise that helps my clients attain their goals â€“ so if you or your adult children are preparing to buy a home together, do contact me to schedule a sit-down to go over todayâ€™s options.
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