Multiple Borrowers Multiple Scores

Even when you and your spouse (co-borrower) show more than adequate income to buy and finance a property, both borrowers often need credit scores or explanations that surpass lender standards. Without meeting this requirement, the lower-score borrower might have to withdraw as a co-borrower. The lender will then limit the loan amount to the qualifying capacity of the higher-score borrower.

You can work around this problem. Buy a two- or four-unit property, or a home with an accessory apartment, and use lease income from the rental units to lift the higher-credit scorer's qualifying income. Also, you could bring in another strong credit person (parent, sibling, friend) to serve as cosigner or co-borrower; however, the amount and repayment performance for that mortgage will impact that person's future credit record and borrowing power.

If you are asked to help someone qualify for a loan, be wary. Likewise, if you ask someone to sign for you, pay the loan diligently. Otherwise, you risk the other person's credit score as well as your own.

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