Mark Feder

Pacific Home Mortgage Funding Inc. San Diego, CA

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Understanding The Difference Between A Co-Borrower And A Co-Signer: What Do They Mean?

March 16, 2021 by Mark Feder

Understanding The Difference Between A Co-Borrower And A Co-Signer: What Do They Mean?There is a lot of jargon that comes with purchasing a home. Even though this could be confusing, purchasing a home is also a significant decision. Therefore, it is critical for everyone to understand exactly what they are signing before they scribbled their name on the dotted line. In some cases, a co-borrower or a co-signer (also called a non-occupying co-borrower) could be needed to strengthen the application. What is the difference between these two terms? 

What Is A Co-Borrower?

First, a co-borrower is simply a co-owner. Both names are on the title of the home. The co-borrower also shares the responsibility of the debt. This arrangement is usually used when two people are purchasing a home together. Usually, the primary borrower is going to be the person with the higher credit score. At the same time, the credit scores of both owners will be taken into consideration. 

What Is A Co-Signer?

Also called a nonoccupying co-borrower, a cosigner is similar to a guarantor. Legally, a cosigner will not have any claim on the home. They will not take possession of the home and their name will not go on the title. On the other hand, they are still financially responsible for paying back the loan. In the event the primary borrower is unable to meet the monthly mortgage payments, the financial responsibility will fall on the cosigner. 

Choose The Right Co-Borrower Or Co-Signer

It is critical for everyone to make sure they choose the right cosigner if they need one. Ideally, a primary borrower will be able to file a successful home application on his or her own. On the other hand, if the bank or credit union says that a cosigner or co-borrower is needed, it is critical to find someone who is reliable and trustworthy. Remember that they are going to be responsible for paying back a loan in the event the primary borrower cannot make the monthly mortgage payments.

Remember that a co-borrower is going to be listed as another owner of the home. In contrast, a cosigner is financially responsible but does not have any legal claim to the home. Understand the difference before signing a mortgage application. 

Filed Under: Mortgage Application Tagged With: Co-Borrower, Co-Signer, Mortgage

Mark Feder

Mark Feder

Mortgage Advisor
Phone: 858-337-1520
Fax: 800-919-8840

DRE #01210598 • NMLS #867081 Pacific Home Mortgage Funding
Company DRE #01926221 • NMLS #1018245
Real Estate Broker – CA – Department of Real Estate
Pacific Home Mortgage Funding, Inc.
4060 30th Street
San Diego, CA 92104

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