Well, you are not alone.  I have a client who wanted to quit.  He wanted to stop all his frustrations of being “The Man” and pack up and leave to another state.  His job was giving him the bonuses as usual, and he was feeling the stress of not being able to provide the way he has done for previous years so he asked me to hook him up with an agent in Colorado.  As I was going through the motions, I asked him if he even discussed this with his wife?  He replied that she will have to go or leave.  He simply could not take the stress of his work and felt his health was at stake. he did not thoroughly go over the challenges he was facing because he felt she couldn’t handle it.

Well, to our surprise, when it came time to discussing the nitty gritty of leaving, his wife understood that a big change was needed to stay here in their house and continue living here in California.  then a family members decided that they did not want to see them leave.  Parents and other family members volunteered to help them out with some of their financially difficulties they were in. Now it seems that there is a rainbow at the end of their tunnel.

What Id like to express here is that, if something means that much to you and you feel as if you are hitting a brick wall, make sure you venture all your possibilities before you become totally discouraged.  Just like if you thinking you cannot afford a house but may have family members who can co-borrow or lend/gift you some of the down payment, ask!  If you don’t ask, you don’t get.   Just liik into things thoroughly.  You ever know when you may find the extra help.  Keep the faith!

The answer to your question can go one of two ways…either yes, it can or no it won’t. This is obvious, however understanding why is the more complicated part. Having a co-borrower on your loan can benefit you in the same proportion that it can hurt you. David mentions very important pieces to the puzzle, so-to-speak. There are some factors that will directly affect your RATE and there are some factors that will directly affect how you QUALIFY for the loan.

Credit rating is important. The FICO score which is the “numeric value” of your credit rating. Having someone on your loan that has a high FICO/credit score may help for both lowering your rate and helping to qualify. A lot of lenders give pricing adjustments to the interest rate based on your FICO score when “pricing” your loan scenario. Meaning that there is a price improvement (decrease in rate) if a borrower has a FICO score of over “X”. Conversely, if the borrower has a FICO score of less than “X” the price adjustment affects the rate negatively (increase in rate). This directly affects your rate!

Regarding qualifying; sometimes the more important issue pertaining to co-borrowers and credit. The score as explained above IS important to the loan scenario and interest rate pricing. But having a co-borrower presents another issue that must be considered.

What is the debt that is being brought to the scenario with adding the co-borrower?

The co-borrower can have a really high FICO score, but what if they have a lot of debt? Lenders will also greatly take into consideration the overall debt-to-income ratio (DTI). This is another factor that may or may not hurt your scenario.

Income (DTI) ratio is as important if not more important than FICO score lowering the rate. It can sometimes be the difference between qualifying. Consider the DTI to be the ratio of total monthly income divided by total monthly liabilities (credit debt). Lender’s require all parties included on the loan to NOT exceed a maximum debt-to-income ratio of “Y”. By bringing another person (co-borrower) on the loan, you increase the chance of raising the DTI. Again conversely, you can lower the DTI by bringing on a co-borrower who has income but little to no debt; lowering the overall debt-to-income ratio.

Loan amount will also directly affect your rate and payment. The Conforming loan amounts usually have the best rates. The more you borrow, the higher the rate is!