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You might be asked by your friend of some relative to co-sign a home loan. But you should think about it carefully and then take the final decision. Because if by chance something goes wrong in the co-signing process, then you will have to bear the consequences. So, it is better to stay alerted while you have been asked for co-signing a loan.
Need to Co-Sign a Home Loan: The only need for an individual to co-sign a home loan is when the primary home loan applicant has a bad credit history and the bank has rejected their loan application. In such a scenario the co-signer is liable to repay the loan, if the primary loan applicant fails to repay the loan.
Things to watch out for before Co-signing a Home Loan
1. Bargaining with the bank:
If you have become a co-signer for a home loan, you will get the benefit of being able to bargain with the bank regarding the terms and conditions of repayment. While bargaining with the bank, you can ask the bank to send you a written format of all the details if you have a good CIBIL Score and good credit history.
2. Select Smartly:
You need to be selective while co-signing a loan as to whether you really want to cosign or not. Because once you have co-signed a loan, you are responsible for its repayment equally as the initial borrower is. The most crucial thing that has to be kept in mind is that you have to repay the loan in full amount.
3. Have Knowledge of All the Terms and Conditions:
Before co-signing a home loan, you should be aware of all the terms and conditions are mentioned in the loan agreement. Some of the important terms and conditions include the tenure of making the payment, a rate of interest etc.
4. Co-signing is A Risky Responsibility:
Whenever an individual co-signs a home loan, he should be prepared to take up the risky responsibility. The co-signer should always remember that in case the initial borrower makes a default in the loan payment, then the cosigner is held responsible for the repayment of the loan.
It is actually evident that an individual is asked to cosign a home loan when the initial loan applicant does not have a good credit score or if the home loan application has been rejected by the lenders previously. You should know that it is an alternative the bank offers to the rejection of home loan application. Co-signing a home loan is not a good idea always because there are many risks involved in it. Therefore it is important to have a clarity of thought as to do you really want to cosign your home loan or not.
How to Remove Your Name from A Co-Signed Loan?
1. Whenever a loan is paid off, the cosigner’s name can be removed from the loan agreement.
2. Refinancing is another way that proves to be quick in removing the cosigner’s name from the loan agreement.
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