If he cosigned

[Anonymous]

My fiancee just talked with a LO on Friday regarding a mortgage application.  The LO told him he was listed as a borrower for a student loan that he cosigned on for his parents to send his brother to school.

My question is, will they look at this loan as negative on his debt to income ratio?  How else could this affect him?

[Anonymous]

This will affect him in two ways...

the first is any payment history on the loan (hopefully there are no negative items or missed payments...)

Second, they will count it against DTI for him when he applies for a mortgage.

[Anonymous]

---

@Anonymous wrote:

This will affect him in two ways...

the first is any payment history on the loan (hopefully there are no negative items or missed payments...)

Second, they will count it against DTI for him when he applies for a mortgage.

---

Sigh...so this counts as if it is his own loan?

[MattH]

---

@Anonymous wrote:

My fiancee just talked with a LO on Friday regarding a mortgage application.  The LO told him he was listed as a borrower for a student loan that he cosigned on for his parents to send his brother to school.

My question is, will they look at this loan as negative on his debt to income ratio?  How else could this affect him?

---

A cosigned loan is a ticking financial time bomb, so he must make sure he learns the full history and status of this loan ASAP!

They might or might not figure this into DTI, hopefully some of the mortgage guys who regularly post here will answer that.  But his number one priority is to make absolutely sure his brother is never late.  He should get permission from his brother to access the lender's website so that every month he can confirm that his brother's payment has been received.  ANY late payments by his brother can damage his credit, so he must stay on top of this and do whatever it takes to keep the loan current.

AND if it turns out there have already been lates on this loan then your fiancee needs to work on cleaning that up ASAP.  I suggest he check the history on this loan, and if there are any dings you should post details on the Student Loan board for advice on how best to deal with them.

[MattH]

---

@Anonymous wrote:

---

@Anonymous wrote:

This will affect him in two ways...

the first is any payment history on the loan (hopefully there are no negative items or missed payments...)

Second, they will count it against DTI for him when he applies for a mortgage.

---

Sigh...so this counts as if it is his own loan?

---

Yep, cosigning always does.  QUESTION: can you qualify to buy this house based entirely on your income and history without your fiancee appearing on the mortgage or the title?  If so, then perhaps that might be your cleanest solution.

[Anonymous]

It does not count "as if" it is his loan.

It is his loan.  Banks/Lenders/Credit Bureaus do not distinguish between signers and co-signers.  All parties are fully accountable and a mortgage lender will have to count this towards DTI.

[Anonymous]

---

@Anonymous wrote:

It does not count "as if" it is his loan.

It is his loan.  Banks/Lenders/Credit Bureaus do not distinguish between signers and co-signers.  All parties are fully accountable and a mortgage lender will have to count this towards DTI.

---

He said he did some research and he thought if it was an education loan, it wouldnt show up as if it was a signature loan.

[Anonymous]

---

@MattH wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

This will affect him in two ways...

the first is any payment history on the loan (hopefully there are no negative items or missed payments...)

Second, they will count it against DTI for him when he applies for a mortgage.

---

Sigh...so this counts as if it is his own loan?

---

Yep, cosigning always does.  QUESTION: can you qualify to buy this house based entirely on your income and history without your fiancee appearing on the mortgage or the title?  If so, then perhaps that might be your cleanest solution.

---

Not yet.  We were going to use him to qualify and just put me on the deed, since my scores were not close to the "median". 

[Anonymous]

---

@Anonymous wrote:

It does not count "as if" it is his loan.

It is his loan.  Banks/Lenders/Credit Bureaus do not distinguish between signers and co-signers.  All parties are fully accountable and a mortgage lender will have to count this towards DTI.

---

+1

Unfortunately, there is no law requiring lenders to emphasize the fact that being a co-signer carries exactly the same responsibility as being a sole applicant. In reality, being a co-signer is worse because most co-signers don't receive statements and notices from the lender, and most do not realize it is necessary to take every precaution to ensure payments are made on time every month, such as tracking the loan online. There are posts every month from unfortunate people who find out the hard way that co-signing a loan for someone who is not responsible may have a vicious effect on credit reports and scores ...

[MattH]

---

@Anonymous wrote:

---

@Anonymous wrote:

It does not count "as if" it is his loan.

It is his loan.  Banks/Lenders/Credit Bureaus do not distinguish between signers and co-signers.  All parties are fully accountable and a mortgage lender will have to count this towards DTI.

---

+1

Unfortunately, there is no law requiring lenders to emphasize the fact that being a co-signer carries exactly the same responsibility as being a sole applicant. In reality, being a co-signer is worse because most co-signers don't receive statements and notices from the lender, and most do not realize it is necessary to take every precaution to ensure payments are made on time every month, such as tracking the loan online. There are posts every month from unfortunate people who find out the hard way that co-signing a loan for someone who is not responsible may have a vicious effect on credit reports and scores ...

---

Yep, in that personal-finance class every High School should have (also known as Reality 101), the hazards of cosigning would have a very prominent place on the syllabus!