Does cosigning on a loan increase ability to lend in future?

Question

***I MEAN INCREASE ABILITY TO BORROW***

I am still in school but on a good scholarship program.  The scholarship would be well enough to help pay for a very small house (80-100k).  The banks like to see non scholarhip money.  My dad said he would be willing to cosign with his very financially prudent son.

I could wait a little while longer untill I am out of school and making income myself OR I could view this as a great opportunity to decrease my liability (on paper) while having 100% of the benifit.

If I were to co-sign would it decrease my debt ratio for so that I could more easily obtain more home loans in the future?  Spreading the debt allow me to purchase more homes with my debt?  (not sure if I used those terms correctly)

John H. · Answer

Excelent.  Thank you very much for your response!

Bill Gulley · Answer

In residential lending, owner occupied, a co-borrower need to reside in the home as well, exceptions can be made such as in the case of a second home. Commercial loans can be different.

Co-signing is a contingent liability and will decrease your ability to borrow. It doesn't increase the capacity of a borrower to pay, but may eliminate some risks. A borrower who has a co-signer is still viewed as having the obligation to pay so it won't increase your ability to obtain other loans by decreasing your debt ratios. :)