Hi Percusion23, we first need to clearly define what you really mean when using the term "Co-signer." There are various loan programs available today, and for our purposes Iâ€™m going to define these as FHA and Non-FHA. In the Non-FHA world there is no such thing as a defined â€œCo-signerâ€, there is only a Borrower and Co-borrowers. However, in the FHA world Co-signers are additionally defined. Here are the different distinctions:
Borrowers and Co-Borrowers take title to the property, are obligated on the mortgage note and must also sign the security instrument. The Borrower/Co-Borrowerâ€™s income, assets, liabilities, and credit history are considered in determining total creditworthiness of the transaction. On the other hand (just FHA world now), Co-signers do not hold ownership interest (title) in the property, but are liable for repaying the obligation and must sign all documents with the exception of the security instrument. The Co-signer's income, assets, liabilities, and credit history are considered in determining creditworthiness for the mortgage and the co-signer must complete and sign the loan application.
So, are you a Co-signer or Co-borrower?
Either way, seek professional tax/legal consultation before agreeing to do this, as ramifications can be serious without proper contractual protections.