Cosignors - Posted by JIMN

Posted by Jon Richards on June 30, 2001 at 14:41:19:

A strong co-signer will always make a note better and more valuable, but the buyer will also look to the property and the loan to value. So with a good payor (the mother) and a good property you should get a good price.

If the payor is going to live in the property it also makes the note more valuable.

Hope that helps

Jon Richards
NoteWorthy Newsletter Publisher

Cosignors - Posted by JIMN

Posted by JIMN on June 30, 2001 at 13:55:50:

I am currently creating a note to sell and have a few questions and concerns I need addressed. I have a buyer who, upon checking her out, I have found to have atrocious credit. Is it possible to have her mother, who has outstanding credit, cosign on the note? I just want to make sure my note looks as attractive as possible and gets a decent buyout. Also, does anyone see a problem with the buyout if my buyer(not an investor) is purchasing a 3 unit for the purpose of simply living there, and not renting it out? Thanks.

Re: Cosignors - Posted by Michael Morrongiello

Posted by Michael Morrongiello on July 01, 2001 at 20:37:54:

A co-borrower will add some benifits to the weak primary payor especially if the co-borrower has reasonable income and a strong credit background. However they may not by themselves make or break a deal.

Most note funders (including ourselves) will look to the property and the primary payor, their income, employment stabililty, credit profile, credit scores, as carrying more weight from an underwriting perspective.

It may be possible to offset some of the issues of concern and risk by bringing in a co-borrower or also by lowering the actual LTV % of the note that is being created and to be converted into cash.

As for the owner occupancy of one of the 3 units in the triplex, that would be typically viewed as a plus especially if bonafide leases exist that bring in additional monthly income off the other 2 rental units.

To your success,
Michael Morrongiello