Update On 2016 Guidelines On Excluding Debts From Co Signed Loans
2016 Guidelines On Excluding Debts From Co Signed Loans
2016 Guidelines on excluding debts from co signed loans has stipulations. Co Signed loans is when a person co signs for a loan for the main borrower and is not responsible for the debt itself but will be responsible for the debt if the main borrower defaults on the loan. Common debts that are often co signed for are auto loans and mortgage loans. There are risks involved for the co signer whenever they co sign a loan. Credit reporting agencies will report the payment history of the main borrower and the co signer. If the main borrower is timely on all of their monthly debt payments, then there is no issues with the co signer. However, if the main borrower is ever late on his or her monthly debt payments, then the late payment history will be reported on the co signer’s credit report as well. Co signing is normally not recommended, however, it is rather difficult to say no to a family member or very close friend who asks you if you would co sign for them. 2016 Guidelines On Excluding Debts From Co Signed Loans require that the main borrower has paid the debts through their bank account in order for the co signer to be exempt from the debt payments in calculations of their debt to income ratios. The main borrower needs to provide 12 months of timely canceled checks and/or bank statements if the monthly debts have been paid online.
2016 Guidelines On Excluding Debts From Co Signed Loans: Auto Loans
Auto Loans are one of the most common loans that require co signers. An average new automobile costs over $25,000 and the average new auto monthly payment is $450 per month. Auto payments greatly affects debt to income ratios with mortgage loan borrowers due to the short amortization schedules on automobile loan terms. Most auto loans are amortized over 5 years. A $450 dollar per month monthly payment is equivalent to a $90,000 mortgage loan balance. Mortgage loan borrowers with multiple auto loans can have very severe negative impacts on how much they can borrow for a mortgage loan.
Co Signers on auto loans can have exclude the monthly auto loan payments only if they are signed up as a co signer and not the main borrower and the main borrower can provide 12 months of canceled checks. If the main borrower has paid their auto loans online, then 12 months of bank statements needs to be provided. There cannot be any late payments in the past 12 months. If the auto loan is paid by someone else and that other person is not on the auto loan note, then the auto loan debt cannot be excluded. If the co signer has co signed on multiple auto loans and the co signer is not responsible in making the payments, then all co signed auto loans can be excluded by the co signers debt to income ratios as long as the main borrowers can provide 12 months canceled checks and/or 12 months of bank statement.
2016 Guidelines On Excluding Debts From Co Signed Loans: Home Loans
FHA and Freddie Mac allows non-occupant co-borrowers to be added on a borrower’s mortgage loan if they need additional income to qualify for their home loans. Many would be non-occupant co-borrowers who do not own homes but someday would like to purchase a home have reservations in becoming a non-occupant co-borrower on a home loan because they feel that may destroy the chances of them qualifying for a mortgage someday. The good news is that 2016 Guidelines on excluding debts from co signed loans include those who are non-occupant co-borrowers. The mortgage payments on those who are co signers will not count against the debt to income ratios of the co signer in them qualifying for their own mortgage as long as they can provide 12 months canceled checks by the main borrower and/or 12 months bank statements if the mortgage payments were paid online. All monthly payments by the main borrowers needs to have been made on time and no less than 12 months payment history by the main borrower needs to have been paid. So the bottom line is that as long as the main borrower has made timely mortgage payments for the past 12 months, the mortgage payments of the mortgage loan of the main borrower can be excluded with the co signer and not affect them when they will be purchasing a new home.