Finance
A Maine borrower who cannot make mortgage payments may negotiate a 'short sale' in which:
AThe home is sold quickly within 30 days
BThe lender agrees to accept less than the full mortgage balance from the sale proceeds✓ Correct
CThe buyer receives a discount for quick closing
DThe seller keeps any surplus after the mortgage is paid off
Explanation
In a short sale, the lender agrees to accept less than the full amount owed on the mortgage as payment in full, allowing the distressed homeowner to sell without going through foreclosure.
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Key Terms to Know
Short Sale
A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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