When the value of a house is less than the amount owed on the house,the borrower:
A) has negative equity in the house.
B) is underwater.
C) must pay any remaining loan balance when the house is sold.
D) has negative equity,is underwater,and must pay any remaining loan balance when the house is sold.

Question

Quizplus · Accepted Answer

Both options A and B are correct in describing the situation of owing more on the house than it is worth. However, option C is not always true as some mortgages have provisions for forgiving the remaining loan balance in the event of a short sale or foreclosure. Therefore, the most accurate answer is D, which includes both A and B and also acknowledges the possibility of not having to pay the remaining loan balance.

When the Value of a House Is Less Than the Amount