Who’s Really Making the Money?
Traditionally, a cosigner has been used when an applicant does not have established credit and/or rental history. Some landlords allow a cosigner is used for someone who has very low income. Rarely is a cosigner used to cover negative rental and/or negative credit. In the cases where a cosigner is required, their income must meet a higher threshold because they will have to cover their living costs as well as the applicant they are co signing for.
Often times a cosigner is one of the applicant’s parents and in these cases we have noticed that all too often that one parent will cosign and list their spouse’s income as well as their own assuming that the total household income will be used as their income as the cosigner. This would be all well and good if both parents were to be cosigning but if only one of the parents is co signing their income needs to meet the criteria individually.
What is the point of a cosigner in the first place if their income also does not meet the requirements?
Income is the only aspect of the application process that a cosigner can help someone who would otherwise be denied. So if a cosigner would also need help from someone else to cover the cosigning income requirements the client is now in a situation where the cosigner needs a cosigner.
When accepting a cosigner applications make sure to check if the person lists only their income or their income along with their spouse/partner. If they are looking to use household income it may be a good idea to have both people cosign or make sure the person with higher income level is the person cosigning.
DISCLAIMER: READ CAREFULLY: The information provided in this article is not considered legal advice and is given only for information purposes. ALWAYS SEEK THE ADVICE OF YOUR LEGAL COUNSEL.