My parents said they’d be our cosigners. What does this mean and how does it affect our chances of getting a home?
When your parents -- or anyone -- agree to be your cosigners, it means they’re putting their financial reputation on the line with you. If you buy a house after getting a loan with cosigners, then your cosigners become responsible should you not be able to make the payments.
Having cosigners can be a smart idea for newlyweds with bad credit or not much credit history at all. If your parents have a good credit history and a strong financial standing, having them cosign a loan will make you stronger candidates, and the bank will be more likely to approve the loan.
If your parents don’t have good credit or have defaulted on loans themselves, then you have to say, “Thanks, Mom and Dad, but no thanks” should they offer to cosign a loan. You have to present yourselves as the strongest candidates to the bank. Explain this to your parents if they’re offended that you turned down their offer to cosign.
Nestpert Jeff D. Opdyke, author of Financially Ever After: The Couples’ Guide to Managing Money
See More: Buying a Home