What Is A Co-Signer? Do I Need One To Rent A Home?
Once you’ve found the apartment of your dreams, it is now time to sign the lease. Based on your circumstances, you may need a co-signer for renting in order to seal the deal.
A co-signer can reinforce your application and help you acquire the home you have selected. Here is some useful information to help you decide whether you require a co-signer to qualify for the apartment.
What Is A Co-Signer?
A co-signer is responsible for paying your rent in case you are ever unable to do so. They don’t need to live in the rented home, but are a signatory to the lease agreement. For instance, a parent may co-sign for a student who is renting their first property for going off to college.
Some applications require a co-signer for renting because the tenants do not meet the income criteria or do not have an adequate credit history. In this case, a relative or friend can act as a co-signer.
Do You Need A Co-Signer?
There are several reasons why your property owner may prefer a co-signer to finalize the deal. Here are some of the main reasons you need to know:
Lack of Rental History
Your prospective property manager is likely to evaluate the type of tenant you have been before renting out their property. Your record is a good predictor of the kind of tenant you would prove to be.
It is possible that this may be your first lease. In case of no rental history, your property manager may require a co-signer to finalize the agreement.
Doubtful Credit History
A common way for property manager to assess a tenant’s ability to pay rent punctually is by conducting a proper credit check. A credit report displays a thorough financial picture, such as late payments, bankruptcy, outstanding judgments or large debt.
Your credit score gives your property manager a clear preview of your past behavior. A low or no credit score can indicate missed payments, considerable credit being taken out, and consequently a lack of responsibility to manage tenancy.
Nevertheless, each case of low credit score can also differ. For example, you may be a young person who did not get time to accumulate a good credit score. In this case, you would be rather different from a tenant who has a low credit score because they failed to pay their bills on time. In both cases, a property owner may express the need for a co-signer for renting.
History of Eviction
If you have a history of being evicted from a rental or breaching your lease in the past, it may taint your record. In such a scenario, most property managers will require a responsible co-signer to finalize the lease with you.
Property managers naturally want tenants who can afford to pay rent on time. Most property owners need the tenants to earn a minimum of two and a half times the monthly rent before they think about renting their property out to them.
For instance, if the rent of a property is $1,000 per month, it is preferable that you make $2,500 a month. If you don’t meet this criterion, your property manager may require a co-signer for you to sign the agreement.
Here are answers to some frequently asked questions regarding co-signer for renting a home:
Who Can Be A Co-Signer?
A co-signer is an individual who is willing to pay your rent if you are unable to do so for any reason. Anyone willing to take up this responsibility can agree to be a co-signer. Parents and close friends are typically most likely to act as co-signers.
Co-signers should have a stable income and a good credit history in order to be approved. Property managers often have a strict criteria for co-signers.
What To Consider Before Asking Someone To Co-Sign?
First, think about how having someone as a co-signer may impact your relationship with them. If you fail to pay your rent on time and the responsibility falls on them, it may strain your relationship with them.
Secondly, make sure you brief the potential co-signer all about the information your property manager will require from them. This usually includes personal information, such as bank statements, credit reports, and employment details.
Make sure you go through the pros and cons with the person before getting them to co-sign. In case you are unable to pay the rent, they will be held responsible. This can, in turn, impact their credit score. If the situation becomes unmanageable, your property manager may end up suing both you and them.
How Long Will They Remain A Co-Signer?
Your co-signer will hold the responsibility for the entire length of your lease. If you successfully make all your rent payments on time during this period, your property manager may waive the requirement for a co-signer for renting when renewing the lease.
What If I Can’t Find A Co-Signer?
If your property manager has expressed the need for a co-signer to finalize the lease agreement, there is hardly anything you can do to get around it. You would probably have to look for a different apartment where one is not required.
In some circumstances, you may be able to offer a substantial deposit upfront. If your property manager still requires a co-signer, ask them the reason and assess what you can do about it. For instance, if the reason is poor credit history, start fixing it. This way, you will have better luck getting approved for a rent agreement next time around.
Having a co-signer for renting makes it easy to secure an apartment if you are a first-time renter. Moreover, if you have no credit or a poor credit history, a co-signer can help you acquire the home of your choice.
However, understand that asking someone to co-sign places a substantial responsibility on their shoulders. Make sure you do not impose financial inconveniences on your co-signer and end up damaging your relationship with them.
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