New Jersey Real Estate Practice Exam Free Practice Question
A seller discovers that a property is worth less than the outstanding mortgage balance. The seller may still be able to sell the property if the lender agrees to a
Correct Answer: A
Rationale: A short sale allows the seller to sell the property for less than the mortgage balance, with the lender's approval to forgive the remaining debt. This option is viable when the property's market value is lower than what is owed.
A deed in lieu involves transferring the property to the lender to avoid foreclosure, but it doesn't provide the seller with cash from a sale. A balloon payment refers to a large final payment due at the end of a loan term, which is unrelated to selling a property. A reverse mortgage allows homeowners to borrow against their equity, but it’s not applicable in situations where the property is worth less than the mortgage.
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