distinguish a co-signer as someone who is not on the title and does not have any ownership interest in the mortgaged home. Having a co-signer or co-borrower on your mortgage loan gives your lender additional assurance that the loan will be repaid. But your co-signer or co-borrower’s credit record and finances are at risk if you don’t repay the loan. Credit score A credit score predicts how likely you are to pay back a loan on time. Companies use a mathematical formula—called a scoring model—to create your FICO credit score from the information in your credit report. There are different scoring models, so you do not have just one credit score. Typically, lenders will pull your credit reports from three reporting bureaus, Transunion, Equifax and Experian, and discard the highest and lowest number using the one in the middle as the determiner for eligibility and rate. When there is more than one borrower on a loan the lender will use the lowest middle FICO score from amongst the borrowers. Debt-to-Income Ratio Your Debt-to-Income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow. Deed-in-lieu of foreclosure A deed-in-lieu of foreclosure is an arrangement where you voluntarily turn over ownership of your home to the lender to avoid the foreclosure process. A deed-in-lieu of foreclosure may help you avoid being personally liable for any amount remaining on the mortgage. If you live in a state in which you are responsible for any deficiency, which is a difference between the value of your property and the amount you still owe on your mortgage loan, you will want to ask your lender to waive the deficiency. If the lender waives the deficiency, get the waiver in
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