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Friday, July 04, 2008



When you co-sign a loan, you are signing a legal contract that holds you responsible for the entire debt, say consumer credit experts. If the borrower does not repay, it can be reported on your credit record. If it goes to a collection agency, the agency will try to collect from you. But the bank can do more than ruin your credit rating. It can sue you and get a judgment against you for the amount of the loan plus interest. "You must go to court and disclose all your assets," Brenner says. "It can even force the sale of your house." And, if the document is like most loan guarantees, it allows the bank to charge you its own legal fees in collecting the debt from you. A typical loan document is written in very small print on two sides of an 8" x 14" piece of paper.

Here are a few things that most people did not realize:
  1. The co-signed loan is going to appear in your credit report
  2. The co-signed loan will be considered as your debt by a new creditor. In other words, if the co-signed loan is for $400/month then this $400/month is going to be calculated in your ability to repay a new loan. The co-signed loan does and will effect your ability to obtain new credit for yourself.
  3. If the person that you co-signed for makes a late payment, that will have an immediate effect on your credit score. This will impact your ability to obtain credit and that late payment will stay on your credit report for 7 years!
  4. If the person defaults on the loan, the bank is going to come after you. When you co-sign a loan, you are equally responsible.
  5. This is also a common problem with those who are seeking a divorce. If divorce is going to happen, make an all out effort to get all of your credit repositioned so that you have no "joint" debt. Many peoples credit destroyed because of the financial struggles of an ex-spouse.



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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.38%
30-yr. fixed jumbo6.75%
15-yr. fixed6.00%
15-yr. fixed jumbo6.50%
7/1 ARM6.00%
5/1 ARM5.88%
3/1 ARM5.62%
1-yr. ARM5.62%
1-yr. LIBOR ARM5.50%
10/1 ARM7.75%
40-yr. fixed7.00%
*Mortgage Rates Updated: 07/03/2008