Finance
A Maryland borrower who is 'underwater' on their mortgage owes:
AMore than the current market value of their property✓ Correct
BLess than the appraised value
COnly interest on their loan
DA balloon payment in the current year
Explanation
Being 'underwater' (negative equity) means the outstanding mortgage balance exceeds the current market value of the property. This can make it difficult to sell or refinance.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Math Concepts
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