1 minute read
Co-Sign Roulette
by The Shopper
MIKE BUDER
This was a painful week for a prospective buyer on one of my listings. She found out after getting her offer accepted that a late payment was made in December on a car loan she cosigned on last year for a relative. The net result was that her credit score dropped below the level needed for her to get the mortgage approval.
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Most people want to be helpful and when a family member or friend who seems to be stable needs a cosigner on a loan the temptation is there to lend a hand. After all, you know this person. They are responsible, they pay their debts, they are honest. However, situations can change and despite someone’s best intentions, they may not be able to make the payments on time due to illness, job loss or other unforeseen circumstances. And when that happens, the cosigners credit it affected. The other thing to consider is that in most situations where two people are on a loan there is joint and several liability meaning that if one party bails, the other party is on the hook for the full amount of the loan.
If you are considering buying a home now or in the near future and you are approached by someone wanting you to cosign a loan, you should consider what the worst-case scenario would be. If the worst case is that your credit would be damaged and you would not be able to purchase the property as a result, then you need to consider that as being within the realm of possibility.
Again, most people want to help a person in need, especially a child or close relative who may not have any established credit or who is just getting their start out of college, a divorce, a relocation or the like. In these situations, it’s important to remember that your name and your credit are on the line and if your credit is tarnished, it may take years to recover from the damage.
If you are looking to buy or sell real estate call Mike Buder at RE/MAX 10 (708) 418-4444, E-mail: mikebuder@remax.net, Website: www.BuderHomes.com. Facebook Friend request Mike Buder: your comments are always welcome.
Mike Buder
A local Christian Businessman
