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Are Mortgage Co-Borrowers on the Rise in Washington State?

With home prices rising steadily across the state of Washington, a higher number of buyers are using mortgage co-borrowers to purchase a house.

Mortgage Co-Borrowers More Common in Washington and Nationwide

According to a recent report published by ATTOM Data Solutions, an increasing number of home buyers in Washington State and across the U.S are using co-borrowers to qualify for a mortgage loan when buying a house. This trend is likely related to the rapid growth in house values seen over the last couple of years.

The company’s most recent “U.S. Residential Property Loan Origination Report” showed that borrowers across Washington and nationwide are increasingly relying on co-borrowers. Specifically, 22.8% of all purchase mortgage originations for single-family homes involved co-borrowers (defined here as “multiple, non-married borrowers listed on the mortgage or deed of trust”).

Last year, the company found that 20.5% of purchase originations involved co-borrowers. So the number rose a bit from 2016 to 2017.

According to Daren Blomquist, senior Vice President for ATTOM, “homebuyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete.”

Seattle, Washington is one of those high-priced markets where analysts are seeing an increasing number of mortgage co-borrowers. The company analyzed dozens of cities across the country, and found that Seattle was one of the metro areas with the highest share of co-borrowers.

San Jose was first with a 50.9% share, followed by Miami at 45.2%, and Seattle with 39.1%.

An Easier Path to Home Buying?

Home buyers in Washington often use co-borrowers to help them qualify for mortgage loan. But what does this term mean exactly? In a mortgage lending context, a “co-borrower” is an additional person who is added to the mortgage loan and typically shares ownership of the home being purchased.

A co-signer, on the other hand, might share responsibility for repaying the debt but typically does not have ownership rights to the property being purchased. But the specific laws and guidelines can vary from state to state.

Related: Is now the best time to buy a house?

It’s important to understand that mortgage co-borrowers are equally obligated to repay the loan. They sign all of the same loan documents and are usually listed on the title as well. Essentially, it’s a situation where two or more people have agreed to share the financial responsibility associated with a mortgage loan.

A co-borrower can either be an occupant or a “non-occupant.” The second term means that they do not plan to live in the home as a primary residence.

In Washington State, mortgage co-borrowers are often family members. But they don’t have to be.

One of the potential advantages of using a co-borrower when buying a home is that the second person’s income could help you qualify for a loan. Similarly, a co-borrower who has an excellent credit score, significant assets and savings, or other financial attributes could help the primary borrower qualify for mortgage financing.

These days, most mortgage programs available in Washington allow for co-borrowers. This is true for most conventional home loan products, as well as the FHA mortgage insurance program.

Have questions? Sammamish Mortgage has been helping Washington home buyers with their mortgage financing needs for more than 20 years. If you have questions about qualifying for a loan to purchase or refinance a home, please contact our knowledgeable staff for help.

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