Escrow & Title
What is a short sale in real estate and how does it affect the title process?
AA sale completed in a short time
BSelling a property for less than the mortgage balance with lender approval; requires lender's deficiency waiver✓ Correct
CA sale of a small property
DA quick close transaction
Explanation
A short sale involves selling a property for less than the outstanding mortgage balance, with the lender's approval. The lender may forgive the deficiency or pursue the seller for the shortfall.
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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.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
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.
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