Co-signing on a loan or a mortgage has many implications for both a borrower and a co-signer. Before you co-sign or ask someone to co-sign on your behalf, you need to known as much as possible. Take a moment to test your knowledge with our quiz before you sign on the dotted line.
What legal implications does co-signing on a loan carry with it?
When you co-sign on a loan, it is a simple way to give a reference on behalf of the borrower.
When you co-sign on a loan, you are making a legally binding agreement.
When you co-sign on a loan, you are only obligated to the agreement for the first two years of the loan term.
What piece of advice do friends often give when you tell them someone wants you to co-sign on a mortgage?
Do it, its no big deal.
Never co-sign a loan.
Check with your bank first.
What is considered the best advice to give someone who is co-signing on a loan?
Tell them to make sure that they know what they are getting into.
Have them tell the person to find someone else to co-sign.
Tell them to co-sign only if the person they co-sign for will agree to return the favor.
What does the bank look for in a co-signer?
The bank wants only someone who has a good credit score.
The bank wants only someone who has a good employment history.
The bank wants only someone who can qualify to make the payments if you default.
If you are married, is your spouse’s signature enough to meet the bank's criteria for a co-signer?
What is a sensible way to establish trust between a loan applicant and their designated co-signer?
Pick a close relative or long time friend to co-sign your behalf.
Have a lawyer draw up a legally enforceable contract between you the borrower.
Give the co-signer a deposit equal to three payments on the loan to hold until the loan is paid off.
What should co-signers do before they sign any of the lenders documents?
Have their attorney review all the documents associated with the loan and verify the property title.
Clarify the number of years payments will have to be made before they are released from the contract.
Clarify if they will be responsible for all property costs or only the bank payments should the loan default.
In addition to actually co-signing the loan papers is there anything else you will have to do for the lender?
Sign a loan application.
No, you just have to sign the papers.
Sign an authorization to verify employment.
When you co-sign on a property, is your name on the deed in addition to the person’s that took the mortgage?
only if you request it
If you co-sign a mortgage loan, what consequences can affect you, even if the owner is paying all the payments?
The fact that you co-signed on a property will not affect you in any way as long as the payments are made.
The fact that you co-signed on a property will enhance your chances of obtaining a mortgage.
The fact that you co-signed on a property could prevent you from obtaining a mortgage of your own.