Pros and Cons of Non-Occupant Co-Borrowers

Non-occupant co-borrowers can be a valuable asset when applying for a mortgage, but it’s important to understand both the benefits and potential drawbacks. Here’s a look at the pros and cons of having a non-occupant co-borrower.

Pros:

1. Increased Loan Amount:
   • Adding a non-occupant co-borrower can increase your loan amount by combining their income with yours. This can help you qualify for a larger mortgage.
2. Better Chance of Qualifying:
   • If your credit score or income isn’t strong enough to qualify for a mortgage on your own, a non-occupant co-borrower can improve your chances of approval.
3. Lower Down Payment:
   • Having a family member as a non-occupant co-borrower can potentially lower your down payment requirement.
4. Broad Definition of Family Member:
   • The concept of a family member is broad, allowing for flexibility in who can be a non-occupant co-borrower.

Cons:

1. Shared Financial Responsibility:
   • Both borrowers are equally responsible for the loan. If one borrower defaults, it affects both parties’ credit scores and financial standing.
2. Default Risk:
   • If the primary borrower defaults, the non-occupant co-borrower must take over the payments. This can be a significant financial burden.
3. Impact on Debt-to-Income Ratio:
   • The non-occupant co-borrower’s debt-to-income ratio will be affected by the mortgage, which could impact their ability to qualify for other loans.
4. Potential Strain on Relationships:
   • Financial stress and shared responsibility can strain personal relationships, especially if there are disagreements about the mortgage payments.

Non-occupant co-borrowers can provide significant benefits, such as increased loan amounts and better chances of qualifying for a mortgage. However, it’s essential to weigh these benefits against the potential risks, including shared financial responsibility and the impact on personal relationships. Consulting with a mortgage professional can help you make an informed decision based on your unique situation.

‍

For a free real-time quote with no credit checks, www.purerate.com/rates, call/text 704.675.7089, or email info@purerate.com

Our guiding principal is radical transparency, we make significantly less on our loans, and pass the savings on to you. In return we need our happy customers to spread the word. This allows Pure Rate to eliminate marketing expenses and deliver industry leading savings.

‍

‍