What’s the Difference between a Co-signer and a Co-applicant on a Mortgage?
If you’re thinking about applying for a mortgage, especially mortgage for the self employed or bad credit mortgages, you may hear the terms co-signer and co-applicant tossed around, but do you know what they mean?
Do you know the difference between the two and which one applies to your situation? Here we’re going to go over the differences and the similarities, so you can make the right choice for you and your home. Depending on your situation one or the other will work better for you – just make sure you don’t sign on the dotted line before you understand what they are and what they can mean for your financial future.
What is a Co-Applicant?
A co-applicant is someone that’s also applying with someone else for a mortgage. If you have a partner, a friend or a family member that will jointly own the home with you, they’re going to be a co-applicant. They’ll help boost your credit and credit-worthiness if they’re doing better financially – just remember that 2 incomes are always better than one when you’re applying for any type of loan, but especially when it comes to mortgages for the self employed. You want to be as appealing as possible to a potential lender!
What is a Co-Signer?
A co-signer is someone that is guaranteeing payment on your behalf, but won’t be a co-owner in the home. When you’re trying to get a home, being appealing to a lender is never easy, but like with a co-applicant it’ll make you look better. You’ll effectively have someone else’s better credit and income counted towards your own and you’ll be able to get a mortgage more easily. If you’ve already qualified for a mortgage but the amount is low, a co-signer will help you raise up the amount.
There Are Similarities
Either way for the most part you’re going to be able to either raise up the amount of your mortgages for the self employed or be approved. It’s important to know that whatever you do, you’ll want to have a co-applicant with good credit or a co-signer with excellent credit. You don’t want to pair bad credit with bad credit; mortgages can get very expensive that way. You’ll want to be very careful about who you work with, and make sure that your co-signer and co-applicant is prepared to help you.
There Are Differences Too!
Like everything else in life, there are differences too. A co-signer is going to help you get the home but they won’t have any stake in the home. A co-applicant will have both a stake in the home and affect the outcome of your mortgage. A co-signer is only responsible if you don’t pay up, while a co-applicant is jointly responsible for the day to day bills, just as much as the applicant is. So in the end, a co-signer is there to help you get the mortgage while a co-applicant is there to be a part owner in the property with you.
Homebase mortgages is a leading Toronto mortgage broker, which specializes in all types of mortgages ranging from home equity loans, second mortgages, private mortgages, mortgage refinancing, mortgage renewals, home mortgages and mortgages for the self employed.
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