If you're a first-time homebuyer looking for a little help securing a home mortgage, you may wonder if your parents can cosign on a mortgage loan to make it more affordable. A lot of young people actually end up going this route. Your parents can make you a more desirable candidate for a mortgage in the eyes of your mortgage broker by agreeing to cosign. This means that in the event that you default or are facing foreclosures proceedings, your parents can also be held responsible for the debt. Ideally, you want to plan out your loan with a mortgage lender to make it affordable and ensure this doesn't occur. But if you're looking at a bad credit mortgage or other problems keeping you from getting the loan you want, a cosign from your parents can definitely help.
Be sure to have them consider their own financial obligations too. They might already have a second mortgage or a home equity loan they are paying off, and so putting them in the position of being responsible for another loan might not always be convenient for them. However, another option is to only keep the cosigned loan until you can can secure a loan on your own. Then you can look into loan modification or mortgage refinancing and get a new loan all together, getting them off the books. Having your parents cosign can be a means to an end.
If you're looking at a pricey mortgage and don't want or can't ask your parents for help, buying foreclosed homes can be another option to consider. Bank foreclosures sell in every city, every day for up to 50% below their actual market value. Since the loan required for them will be smaller, you can often more easily get approved, and come away with a great home at a great value.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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