A co-borrower is any additional borrower whose name appears on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have an obligation to repay the loan. For mortgages, the names of applicable co-borrowers also appear on the property's title.
What is a co-borrower? A co-borrower is someone who joins you, the primary borrower, in the mortgage application process. Their credentials are used, in conjunction with yours, to qualify for a home loan. This means they share the financial responsibility of loan repayment and have partial ownership of the asset.
While both share the financial responsibility, a co-signer is not included on the property's title and does not have ownership rights. In contrast, a co-borrower is listed on both the mortgage and the title, holding an ownership stake in the property.
You can remove a co‑borrower, but you'll need to renegotiate your loan.
If the other party stops making payments, as co-owner, you can take possession of the property. This is not the case as a co-signer. Remember that a co-signer is not on the title of the property and cannot take ownership of it. Getting a home loan with a partner is the same as if applying solo.
Yes, you can sue the person you co-signed for if they don't make the payments they promised to make. You may be able to get a judgment against them in court, but it could be hard to collect that money since they didn't pay the debt in the first place.
In most cases, the responsibility of the mortgage will be passed to the beneficiary of the home if there is a will. If you applied for your mortgage with a co-borrower or co-signer, the solution is relatively simple: The other party must continue paying the loan.
Borrower's Responsibilities:
Make loan payments on time. Make payments despite nonreceipt of bill. Notify servicers of changes to your contact or personal information.
As a co-borrower, gaining substantial benefit from a loan means that you receive a reasonable portion of the benefit. So, for example, if you were to take out a home loan with your partner to buy a property in which you had an equal share, you would both be substantially benefitting.
Generally, co-borrowers share the title of the home. But this isn't always the case since the loan and the title are separate. Be aware that if you're a co-borrower and your name isn't on the title, you'll still be responsible for paying off the mortgage – but won't have the right to use the house.
You are a co-borrower and are fully responsible for the loan if the student borrower cannot pay. The interest rate, terms, and conditions will depend on your creditworthiness. The better your credit, the better interest rate, terms and conditions you should get.
You can only sell if you get permission from the other co-owner(s). If all the co-owners agree that you should sell a property, and when you should sell it, then there's no problem. Unfortunately this doesn't always happen.
Requirements can vary by lender and loan type. All loans specify that the co-borrower can't have a financial interest in the sale of the property. For example, you can't co-borrow with the seller, builder, real estate agent, appraiser or attorney selling the home.
While only one co-borrower will retain ownership of the home after the other is removed from the mortgage, the departing co-borrower may still have to take additional action to remove their name from the house title and give up their ownership rights.
Ownership Rights: A crucial difference between a co-signer and a co-borrower relates to the ownership of the vehicle. A co-borrower, also known as a joint applicant, shares equal ownership rights of the car with the primary borrower. They have legal authority to use the vehicle as they please.
Rights of co-borrowers
All areas of the property are accessible to each individual. Also, each owner decides who receives her share of the property when she dies. So not all owners will receive their share. The other co-owners must consent to the sale of an owner's share.
Typically, removing a name from a mortgage could require you to pay off the loan in full or refinance it with a new loan. But, there are alternatives where you can take over the loan without paying off it off or refinancing. These could include mortgage assumption, loan modification and bankruptcy.
As an equal partner on the financial agreement, a co-buyer shares the benefits of ownership and the financial accountability. This means that the co-buyer and the primary borrower have the same rights, such as the ability to sell the vehicle or trade it in (though both parties would have to agree to do so).
Miller & Starr, the leading treatise on California real estate, explains that: “As between the cotenants, each has the right to enter on and to occupy the entire property, and no cotenant has the right to exclude another cotenant from any portion of the property.” Right to possession, 4 Cal. Real Est. (4th ed.)
Removing a cosigner or co-borrower from a mortgage almost always requires paying off the loan in full or refinancing by getting a new loan in your own name. Under rare circumstances, though, the lender may allow you to take over an existing mortgage from your other signer.
You can take legal action against them for breaching the agreement you both made or seek a court order to force the sale of the property. It's important to consult with a lawyer to understand your legal rights and options and to make the best decisions for your situation.
Selling a property with your name on the deed but not on the mortgage creates added levels of complexity and requires more collaboration with third parties. However, you can achieve a successful sale with careful planning and the right support.