Question: I own a home that I have a mortgage on and make all payments on. There is a co-borrower on that loan. I want to buy a second home. For mortgage purposes, will the entire first mortgage count against me or just 1/2 of it?
Answer: It probably depends on how the contract reads concerning the loan. If you are responsible if the other borrower defaults, then it will certainly count against you. It counts in full against BOTH of you, since either one of you can be legally liable to the lender for the entire payment. What your agreement is between the two of you is of no concern to the lender.
Co-signing loans is a lot more serious than a lot of people treat it. I get asked all the time, and then people GET MAD when I won’t. I’ve tried that here in Atlanta. They pointed out I could spend all my money and default on the other houses I own. Why don’t you talk to a loan officer in your town; they may be different there. Go to see the company that holds on the mortgage on the property in which you have equity. A friend asked me to co-sign a car loan for her adult daughter. I had met the daughter maybe 3 times. The daughter was nice enough but I had no idea where she lived, did not see her regularly, knew next to nothing about her finances except that she had bad credit. Well, her Mom got indignant wanting to know why wouldn’t I sign, like it was a personal insult. Never saw the “friend” after that.
The only loan I ever co-signed was to get our oldest son started, and that loan wasn’t for any more than we could just write a check for if we had to. He lived with us and we knew exactly what he was doing, working, banking & where the (used) car was. He paid it off and had good credit of his own after that. He now has a new truck that cost more than my car, he put $10k down, 3 year loan, I had nothing to do with it.
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