Co-signing the loan or a joint owner mortgage? There is a difference. Co-signing the loan means it is her house but if she doesn't pay, you have to. Joint ownership, as long as you read the paperwork, is the house is jointly owned by the two of you.
A co-signer takes on all the rights and responsibilities of a loan along with the borrower. This means that if the borrower can't make a payment on the loan, the co-signer is responsible.
Cosigning a loan doesn't give you any title, ownership, or other rights to the property the loan is paying for. Your only role is to repay the loan if the main borrower falls behind on the payments or defaults.
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.
The cosigner is legally responsible for the debt if the primary borrower can't make payments. Any late or missed payments can negatively impact both parties' credit scores. Furthermore, the cosigner doesn't have any ownership of the vehicle.
If you want to refinance to remove a co-signer, you'll need to have sufficient credit and to be in good financial standing to handle the mortgage on your own. You may need to find ways to boost your credit score, lower your debt-to-income ratio, and otherwise prove to lenders that you can afford to pay the mortgage.
Key Takeaways
Co-signers are responsible for repaying a loan if the primary borrower fails to do so. Co-signers have very limited rights compared with co-borrowers. It may be a good idea to create a written agreement with the primary borrower and to communicate regularly about the loan.
Co-borrowers can remain in their role until the mortgage is fully paid off. However, if the primary borrower finds they're able to assume full financial responsibility for payments, or the co-borrower asks to be removed, the primary borrower can apply to refinance the mortgage to be in only their name.
Co-signers can lose their property if the loan defaults.
Keep copies of all paperwork on hand in case disputes arise, and ask the lender to notify you in writing if the borrower ever skips a payment.
A cosigner on a loan is legally responsible for the debt if the primary borrower defaults. Cosigning a loan will show up on your credit report and can impact your credit score if the primary borrower pays late or defaults. Cosigners may sign for student loans, personal loans, credit cards, and even mortgages.
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.
Responsibility for payments: If the borrower defaults, the co-signer is responsible for all loan repayments. No legal claim: The co-signer is not on the title and has no legal claim to the car.
The co-signer must repay the debt if the borrower fails to make their loan payments. However, a co-signer isn't responsible for making monthly payments on the loan, and their name isn't listed on the deed.
Being a cosigner does not give you rights to the property. A cosigner has no title or ownership in the property secured for the loan. Additionally, a cosigner has no legal right to occupy a home as a primary or secondary residence, unlike the primary signer/borrower.
“ When you cosign for someone else, you're lending them your name and good credit history. You're also making a legal commitment that you will be responsible for meeting the terms of the account if the primary borrower dies, loses a job or otherwise fails to make payments.”
While you don't necessarily have the same rights to the vehicle as the primary borrower, you – as the co-signer – are equally responsible for ensuring the loan is paid back. If the primary borrower doesn't make their monthly loan payment, you will be asked to make the payment.
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.
Request release from a co-signed loan
Co-signers can make a written request to the lender to be released from a loan. In certain cases, like some student loans, there may be a provision that allows a co-signer to take their name off a loan.
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.
Remember, the primary borrower legally owns the vehicle, so an auto loan co-signer cannot take over without the consent of all parties and a refinance loan.
Q: Can You Sell a House Without a Cosigner's Permission? A: Selling a home without the permission of every co-owner is generally not permitted.