Finance
A NJ co-signer (guarantor) on a mortgage loan is responsible for:
AOnly half the mortgage payment
BThe full mortgage debt if the primary borrower defaults✓ Correct
COnly the property taxes
DPayments only during the first year
Explanation
A guarantor or co-signer is equally responsible for the full mortgage debt. If the primary borrower defaults, the lender may pursue the guarantor for the full outstanding balance.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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