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Ms. Stovel Rivers emphasizes that co-signers must do their due diligence on the borrower, probing to find out why they can’t qualify for the loan on their own. Risks to relationships and finances From Ms. Stovel Rivers’ perspective, the biggest risk when co-signing a loan is the relationship. She says it’s important to get granular with the details, even when it doesn’t feel comfortable, and to agree upfront on how you’ll disagree later.
“Before you co-sign, be sure that you can afford to pay off the debt – the amount of that loan – if the borrower defaults. If it’s going to hurt you financially to assume the payments, co-signing a loan probably isn’t the right idea,” Ms. Lucreziano says. An adult child who has never had debt before may need to establish a credit rating with a co-signed loan or mortgage. That last one is something Mr. Maiorino has thought about in relation to his own daughter.
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