Finance
In Michigan, a 'short sale' occurs when:
AThe property sells quickly in a competitive market
BThe property is sold for less than the amount owed on the mortgage, with the lender agreeing to accept less than the full payoff✓ Correct
CThe closing happens in less than 30 days
DA buyer purchases a property with less than 10% down
Explanation
A short sale in Michigan is a transaction where the lender agrees to accept less than the full mortgage payoff from sale proceeds, allowing the property to sell and avoiding foreclosure. The lender may release the borrower from the deficiency or require a contribution.
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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.
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.
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