Cosigner/Co-Borrower

“Cosigner” and “co-borrower” are often used interchangeably, and for the most part, they are the same thing. There are a few instances in which they are different, especially if you are trying to get a loan from the Federal Housing Administration.

Otherwise, they are virtually identical. A cosigner/co-borrower is someone who agrees to be on the mortgage with the primary borrower. They are not on the title of the property, but are on the mortgage. This is useful for a borrower who has a short or weak credit history.

While being a cosigner can be helpful to a friend or family member, it can also have a major impact on your own finances. If the primary borrower misses a payment, the bank can come after the cosigner for the money. The missed payment also shows up on the cosigner’s credit history.

For a mortgage from the Federal Housing Administration, a co-borrower does get named on the title of the property and has a full credit check run on them. They must also sign the security instrument -- i.e., collateral. Usually, the deed to the house is used as the security instrument. Cosigners for FHA loans also have credit checks run, but they do not have to sign the security instrument.
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Being a cosigner/co-borrower is a big responsibility, and not a step that should be taken lightly. An experienced real estate agent can advise you on your options, including whether or not you need a cosigner or if you can get the mortgage on your own.