Jim Weiker, writer for The Columbus Dispatch, warns against the danger of co-signing a mortgage. The co-signer assumes all the risks of the loan but receives none of the benefits. The lender is just as responsible, and this can amount to taking on a second mortgage. A co-signer is responsible for making a payment if the other person defaults. Ask yourself if you can afford that—as many as 3/5 co-signers end up paying the loan as reported by the Federal Trade Commission.
Even worse, some theorize that co-signers are pursued when lenders face delinquent funds. A lender could sue you, especially if you have better credit than the other signee. Thus, it could limit the co-signer’s ability to borrow money him/herself.
Finally, co-signing for a friend or family member could put a strain on your relationship. Would you judge they way someone spent that money that you co-signed for? If you want to financially help someone you care about, consider giving money towards the down payment (up to $13,000/year without paying a gift tax, or $26,000 filing jointly).
So before you co-sign a mortgage, think twice before you agree. Read the full article here.