What is a Cosigner?
A cosigner is a person who signs a lease with you and promises to pay the rent if you are unable to. Even if only on paper, a cosigner is considered to be an additional tenant. The cosigner must also legally occupy the rental property and sign the lease with the tenant. This individual is also willing to share the financial responsibilities of a tenant, including any possible expenses, unpaid rent, or property damage. As they must demonstrate an income greater than six times the rent in order to qualify, cosigners typically have better credit than the renter and a higher income. A co-signer can make it much simpler for a young or first-time renter to qualify for a rental home.
What is a Guarantor?
In contrast to a cosigner, a guarantor agrees to pay your rent only if you are unable to. In contrast to a co-signer, a guarantor is not regarded as a tenant and does not have the same rights. A guarantor can be viewed as a financial safety net in the event that the tenant is unable to meet his or her financial obligations. Like a co-signer, a guarantor must show income that is at least 6 times the monthly rent.
Key Differences
The primary contrast between a cosigner and a guarantor is that a cosigner is legally accountable for the rental property, whereas a guarantor is only financially accountable. If the tenant does not pay rent or make repairs to the property, the guarantor is financially responsible. However, regardless of whether the tenant pays the rent or not, a cosigner is still responsible.
Why You Might Need a Cosigner or Guarantor
You may require a cosigner or guarantor for a variety of reasons. Perhaps you are new to the rental market and lack established credit. Or perhaps you’ve experienced financial difficulties and your credit has suffered as a result. Whatever the reason, you might need to ask a friend or member of your family for assistance if you can’t get approved for an apartment on your own.
How to Ask Someone to Help
It’s important to be upfront about your financial situation when asking someone to cosign or serve as your guarantor. Justify your need for assistance and let them know what would happen if you were unable to make rent. A copy of your lease agreement or proof of your income should be provided, as well as any other pertinent paperwork. Last but not least, be sure they are aware that if you are unable to pay your rent, they may be held accountable. Choose a person you trust and who is financially secure as a result, as this will work best.
Finding a cosigner or guarantor is a significant choice. However, the right person will be happy to assist you if you are honest about your financial situation and outline the risks involved. You can contact one of our Bozeman property managers if you have any further inquiries.
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