Co-Signing for Student Loans Could Mean No Refinancing Facility
There could be complications for Parents Co-signing loans for their children and then wishing to apply for refinance of their home.
A mortgage company recognizes that the parents share the obligation of making payments on a student loan to the same extent as the children. This means that for Parents Co-signing loans, responsibility for this debt will be considered during the assessment. Adding to this will be factors relating to other debt such as a credit card.
It has become an issue for many parents, who having co-signed for the college loans of their children, now find themselves in a financial quandary as the lender seeks repayment of outstanding amounts.
An observation from the website of the Federal Trade Commission is that Parents Co-signing loans, they are being requested to take a risk that has been declined by a professional lender. If the borrower had the means to meet the lending criterion, a co-signer would not have been required.
On the loans of the children being out of deferment and they have a historic on time payment record of 12 months; a request may be made for parents to be removed as co-signers on their loans.
Parents co-signing loans for their children should be aware of the serious legal commitment they are making. It must also be realized that this responsibility could have an influence on their particular financial position and needs. In this situation, consideration should be given by parents, regarding the potential consequences of their actions.