Property Condition
What Is Underwater Mortgage?
An underwater mortgage (also called negative equity) is when a homeowner owes more on the mortgage than the home is worth. It limits selling options and may require a short sale.
A mortgage is 'underwater' or 'upside down' when the loan balance exceeds the property's market value. Selling normally would leave the homeowner unable to pay off the loan from the proceeds.
Underwater homeowners who need to sell typically have a few paths: bring cash to closing to cover the gap, negotiate a short sale with the lender, or in some cases a deed in lieu of foreclosure.
A cash buyer can sometimes help structure a solution, including assisting with a short sale negotiation, when a property is underwater and the owner needs to move on.
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