What Is A Non Occupying Co Borrower

Dated: December 5 2019

Views: 87

Image title

If you’re worried about whether you can get a loan on your own, having a co-borrower can take a lot of the stress off. Because there are two people applying for the loan, the lender has a lot more potential assets to consider and two different credit scores. In most cases, the co-borrower on a mortgage loan will live at the same address as the primary borrower (such as the residence being purchased.) Depending on circumstances, though, it is possible to have a co-borrower who doesn’t live at the same address.

Non-Occupying Co-Borrowers

As the name implies, a non-occupying co-borrower (also called a non-occupant co-borrower, or NOCB) is another person who is willing to take responsibility for a mortgage loan but who won’t be living in the purchased house. In most cases this is a family member such as a parent, sibling or spouse, though the exact restrictions will depend on the loan program you use. The co-borrower’s income is added in with the primary borrower’s for the purpose of qualifying for the loan, allowing the primary borrower to get the loan even if they couldn’t qualify on their own.

Both the income and the liabilities of the co-borrower are considered along with the income and liabilities of the primary borrower. The total income and total liabilities of both are calculated and then used to determine the overall debt-to-income ratio of the two borrowers; provided that it’s favorable enough, they’ll then qualify for the loan. Because they are co-borrowers on the loan, both the primary borrower and the NOCB are equally responsible for the loan payments.

Advantages and Disadvantages

There are a few distinct advantages of using a non-occupying co-borrower for a mortgage:

  • Can qualify you for a loan that you might not get otherwise

  • May earn you a better interest rate or more favorable loan terms

  • Provides you with someone else to help ensure that payments are made on time

  • May be able to refinance without the NOCB later as your credit score improves

Unfortunately, there are a few disadvantages as well:

  • Can strain relationships between you and the NOCB

  • Both borrowers are held liable in case of loan default

  • Not all co-borrowers will help you qualify for a loan

  • Not all co-borrowers will be eligible under the terms of your lender

  • Some lenders don’t allow NOCBs on loans, especially with first-time borrowers

Because non-occupant co-borrower loans are not cut and dried, it can take a bit of research to figure out whether you can even make use of one of these loans.

Should You Use a NOCB?

Assuming that you and your non-occupant co-borrower qualify for an NOCB loan through your preferred lender, the question remains of whether you should even try to add a co-borrower to your loan. There isn’t necessarily an easy answer to this question. The answer relies so much on your specific situation that it’s difficult to give a definitive answer, though there are a few things you can consider to try to find the right answer for you.

Take a moment and ask yourself the following questions: What are the rules concerning non-occupying co-borrowers from your lender? If they’re allowed, how likely is it that the co-borrower you have in mind will actually help your application? Is the co-borrower someone you can trust with this, or will the experience likely be stressful? Consider how reliable your co-borrower is, how it will affect your loan terms and how much this will actually help your case. The more thought you put into it, the closer you’ll be to finding the right answer for you.

Get Some Professional Advice

If you’re still not sure, try discussing your situation with a loan specialist. Here at HomeKeepr, we can help you find the professional to answer all of your questions. Sign up for a free account today and start looking for the specialist that’s right for you and your needs.

Blog author image

Christopher Loschiavo

Putting clients needs first. I am a REALTOR with I Think Realty of Winter Haven. After working for 20 years in Higher Education Administration dealing with student misconduct such as cheating, alco....

Latest Blog Posts

April 2021 Housing Market Update For Osceola County Florida

- Hi everyone, Chris Loschiavo with Home Team Epic and I Think Realty, I've been doing market updates for Polk County for almost a year now. And in the last month had some requests to take a look at

Read More

April 2021 Housing Market Update For Polk County Florida

- Hello, everyone. Chris Loschiavo with Home Team Epic and I Think Realty, here once again for our market update. This is for the month of April, 2021 for Polk County Florida. We're focusing on

Read More

Make Spring Cleaning Easy With Built In Storage

It might be a bit on the chilly side now, but it’s not going to be long before spring cleaning season is upon us again. It’s a great way to refresh spaces and toss out that stuff that’s just

Read More

Do You Need A Water Leak Detector

Leaks in your home can be a major problem. This is especially the case if leaks occur while you’re away from home or happen in places that you can’t easily access. While some leaks can be

Read More