While cosigning for a friend or family member can help them secure a mortgage loan, it also incurs some significant risks:
The cosigner is liable for the debt until it is paid in full.
Increases the cosigner’s DTI.
May reduce the ability to borrow for new loans.
Late payments by the borrowers will affect the cosigner’s credit report.
If payments are missed, the lender can take legal action against the cosigner.
If the borrower defaults on the loan, the cosigner will have to assume the debt.
If you are in a financially secure situation and can help your friend or family member, remember to communicate with them often and ensure they are making payments.