Financing in Chattanooga>Question Details

Ben Pinson, Home Buyer in North Chattanooga Ne...

Are there negative effects to an individuals credit for co-signing on an FHA loan if the payment is made on time, every time?

Asked by Ben Pinson, North Chattanooga Neighborhood Association, Chattanooga, TN Fri Dec 17, 2010

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The recommendation to check with the lender is a good one. In addition to it potentially affecting you as an outstanding obligation in general, if you wanted to get a mortgage for a home of your own, it would likely count toward your debt to income ratio. That could keep you from being able to qualify for a mortgage (or any other type of loan, e.g. auto loans, etc).

I would never co-sign on a loan unless I was prepared to make the payment myself for the duration of the loan. Which could be up to 30 years in this case.
Web Reference: http://www.JuliaOdom.com
2 votes Thank Flag Link Fri Dec 17, 2010
Good question but probably better asked to your lender. Co-signing may be seen as an obligation to your credit that would be a negative like have an open balance on any other type of loan. Even though you are not the primary guarantor you may still have the balance of the loan against your credit.
1 vote Thank Flag Link Fri Dec 17, 2010
Julia seems to have provided the most comprehensive answer.

If you are looking for a co-signer they have to be comfortable with relying upon you to make consistent, timely payments. Likewise if you are planning on being a co-signer you may want to make certain that you are in a position to absorb any consequences such as late payment and the reduction of future mortgage credit available to you.

Tom
0 votes Thank Flag Link Wed Dec 22, 2010
Hey Ben,

There are no negative effects to credit when co-signing on a FHA loan if the mortgage payments are made consistently on time. However, it is important to know that unless you are related (family), you are unable to co-sign on a FHA loan.

Regards,
Andrew
aluett@luettmortgagegroup.com
773-456-9662
0 votes Thank Flag Link Sat Dec 18, 2010
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