You love John and he loves you. Things could not get any better. You’re even thinking about making that next big step together – buying a home. It sounds like a good idea, but there’s a catch. One of you has less than stellar credit. Cosigning a mortgage loan is one option, but there are pluses and minuses to consider in this situation. Read below to gain a better idea of the ramifications of cosigning a loan with your significant other – both the bad and good:

Pros

1. More buying power
Two incomes are obviously better than one, so if you both have money to contribute, going in on a home together could earn you a larger dwelling or a more desirable neighborhood. In addition, if one of you has bad credit, by cosigning a loan, you are likely helping that person get a better interest rate than he or she could have obtained on their own.

2. An investment you can make together
Buying a home with your significant other can serve as a great investment in your future together. You can research properties, chose one that suits both your tastes and make modifications to reflect you as a couple.

3. Strong form of commitment
Cosigning a loan together is a huge decision. As a result, making this sort of commitment serves as a foundation for your relationship. In doing this, you are saying, I trust you and I want to make this long-term investment with you – despite any past credit problems or financial risks.

4. Help establish credit
By investing in a home and making your payments on time and in full, both of you are building equity. This is a win-win situation for both the person with bad credit and the one with good credit.

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