Should you buy a house by yourself or with a cosigner? Here are a few things to consider.
A House Cosigner Can Help You Qualify for a Loan
One of the main reasons why people often team up to buy a home is they're more likely to qualify for a mortgage. Two incomes are better than one, right?
For example, let's say you are thinking of moving into a home with your brother. You have two options:
- Buy the house by yourself – right now you're making $70K a year.
- Buy the house with your brother- they're also making $70K per year right now.
If you go solo, the total income being looked at by the mortgage company is $70K/year. That is certainly high enough to qualify for some mortgages, but it may not be enough for your particular situation.
On the other hand, a combined income of $140K will greatly expand your options. It doesn't necessarily mean you can now get a mortgage that's twice as much as a $70K income could qualify for, but it's definitely higher.
A Cosigner Makes Ownership More Complicated
Just because someone cosigns a mortgage doesn't mean they also own part of the house. They can cosign on the loan without being on the title of the home.
But that gets messy. There generally isn't much incentive for someone to do that. Sure, they may feel better about helping you qualify for the loan. But they're essentially signing up for all the risk without any tangible upside. At least you have the home in their name. If it appreciates in value and you sell it later, you reap all of the benefits.
Cosigning a Loan can Jeopardize Your Relationship
Have you ever heard that you shouldn't mix family and business? Or business and pleasure? There's a reason for that. It's because sometimes a business deal can go wrong. If you were also in a relationship with that person, now your friendship or romantic relationship is tainted.
If you're married, that's a bit different. I'm talking about buying a house with a family member, or maybe a best friend.
To see how things can go south, let's use an example. Let's say you decide to buy a house with your brother. You both agree to pay half the rent each month. After a few months, you lose your job and struggle to pay your share. He understands and says he can pay it.
But the job market is tough and it takes you a while to find a job. Now your brother has been paying the mortgage all by himself and he's getting frustrated.
Finally, it comes to a head and he doesn't want to deal with it anymore. He wants you to start paying… but you can't. You have a fight and decide to sell the house.
That could've been avoided if you hadn't bought the house together.
Should you buy a house by yourself or with a cosigner? That's up to you to answer. Just keep in mind there are pros and cons to both options. It may make sense to first see if you can prequalify on your own. Just give us a call at (877) 306-0222 and we'll see what we can do for you!