Does it matter who is the primary borrower on a mortgage?
Determining who will be the primary and secondary borrowers depends on the type of joint mortgage opened and whether the borrowers are co-owners or co-signers. Both have an obligation to pay the mortgage debt, and both get sent to collection if the mortgage goes into default.
Is co-borrower a co-owner?
The major difference between co-owner and co-borrower is that the co-owner is always a co-borrower in case of joint home loan. However, a co-borrower need not compulsorily be a co-owner of the property. A co-borrower is eligible for tax benefits under income tax laws only if he is also that co-owner of the property.
What’s the difference between co-owner and owner?
Joint owners have rights that are defined by the type of ownership method chosen. The term “co-owner” implies that more than one person has an ownership percentage of the property. Joint ownership, in its three common forms, refines and defines the rights of the co-owners.
While both applicants share equal obligation of debt on a joint mortgage, the primary borrower is the person whose credit score is used on the application. The applicants do not get to select this part themselves. In most cases, the person with the higher income will become the primary borrower.
Can a co-borrower be a primary borrower on a mortgage?
Since the borrower and co-borrower are equally responsible for the mortgage payments and both may have claim to the property, the simple answer is that it likely doesn’t matter. In most cases, a co-borrower is simply someone who appears on the loan documents in addition to the borrower. Some lenders, however, may indicate a “primary borrower.”
Who are the co-owners on a home loan?
Hence, all co-owners are necessarily co-applicants to the home loan application, along with the main borrower but all the co-applicants may not be the co-owners of the property”, explains Yogesh Pirthani – Associate Partner, Economic Laws Practice (ELP).
Who is the primary borrower on a home loan?
If both borrowers have similar credit scores, lenders will list the person with the higher income as the primary borrower. A borrower who has bad credit and cannot get a mortgage himself can ask another family member or friend who does have good credit to open the mortgage with him as a co-signer.
When to add a co-borrower to your loan?
A co-borrower’s credit history can be useful if the other borrower has little or no credit history. This is often the case amongst young first-time home buyers. When lenders are deciding whether or not to approve them for a loan, the addition of a comprehensive credit history from a co-borrower can be beneficial.