While a coborrower or a cosigner offer support during the mortgage process, there are important differences between the two. One would share ownership in the home while the other ensures the lender that you have a backup if you miss payments. But do you know which is which?
A coborrower, also known as a joint applicant or a co-applicant, is a person who applies for the mortgage loan with another borrower. The coborrower shares ownership of the home, as well as the risks and responsibilities. Spouses typically apply for a mortgage with their partner as a coborrower. As a mortgage lender is looking at two incomes instead of one, a primary borrower and a coborrower may be able to qualify for a higher loan limit or lower interest rate more easily.
A cosigner is a person who signs with the primary borrower but holds no legal rights to possess the property. If a primary borrower has little to no credit history, a lower credit score, low income, or a high debt-to-income ratio, a cosigner can help them qualify for a loan they would otherwise not be qualified for. They take on the full legal responsibility for repaying the loan if the primary borrower misses payment.
Typically, a cosigner is a family member or loved one in a better financial state than the borrower. A cosigner could be beneficial for a younger borrower or a first-time homeowner.
For a smooth mortgage process and reliable service, contact us today! Our Loan Originators are ready to help your homeownership dreams come true, whether you’re applying with a cosigner, a coborrower, or on your own.
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