Finance
In a Michigan short sale, the lender agrees to:
AReduce the mortgage interest rate
BAccept less than the full amount owed on the mortgage as full payment✓ Correct
CExtend the loan term to reduce monthly payments
DForgive 50% of the loan principal
Explanation
In a short sale, the mortgage lender agrees to accept a payoff amount less than the total outstanding loan balance, allowing the homeowner to sell the property and potentially avoid 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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
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