Finance
In South Carolina, what does 'underwater mortgage' mean?
AA mortgage on waterfront property
BA mortgage where the outstanding loan balance exceeds the current property value✓ Correct
CA construction loan for below-ground structures
DA mortgage in default status
Explanation
An 'underwater' (or 'upside-down') mortgage occurs when the outstanding loan balance is greater than the current market value of the property. This creates negative equity and can make it difficult to sell or refinance the property.
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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.
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.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Math Concepts
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