Finance
A NJ homeowner who cannot sell their home for enough to pay off the mortgage may negotiate a 'short sale,' which means:
ASelling the home quickly in less than 30 days
BSelling the property for less than the outstanding mortgage balance with the lender's approval to accept the proceeds as full or partial satisfaction✓ Correct
CA sale with a short-term lease-back to the seller
DA discounted sale to a family member
Explanation
A short sale occurs when a lender agrees to accept less than the full mortgage balance to release the lien, allowing the property to sell. This requires lender approval, and there may be tax implications for the difference (phantom income).
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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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