Why might a borrower agree to a short sale?

Why might a borrower agree to a short sale?

• A. To avoid a foreclosure sale
• B. To profit more from the sale
• C. To secure a better interest rate
• D. To refinance existing debt

Answer: (A)

A borrower might agree to a short sale primarily to avoid a foreclosure sale. In a short sale, the lender agrees to accept less than the total amount owed on the mortgage, allowing the homeowner to sell the property and pay off the loan at that reduced amount. This option can help the borrower avoid the more damaging consequences of foreclosure on their credit report and financial future. Additionally, a short sale can relieve the borrower from the burden of an unaffordable mortgage, potentially offering a path to stability if they are unable to keep the home. While other options might seem appealing, they do not accurately reflect the primary reasons a borrower would pursue a short sale. For instance, profiting more from the sale is generally not a motivator in a short sale scenario, as the sale price is typically less than what is owed on the mortgage. Securing a better interest rate or refinancing existing debt are also not outcomes of a short sale, as these actions involve the borrower keeping the property and renegotiating loan terms rather than selling. Thus, the focus remains on avoiding the more severe implications of foreclosure.

A borrower might agree to a short sale primarily to avoid a foreclosure sale. In a short sale, the lender agrees to accept less than the total amount owed on the mortgage, allowing the homeowner to sell the property and pay off the loan at that reduced amount. This option can help the borrower avoid the more damaging consequences of foreclosure on their credit report and financial future. Additionally, a short sale can relieve the borrower from the burden of an unaffordable mortgage, potentially offering a path to stability if they are unable to keep the home.

While other options might seem appealing, they do not accurately reflect the primary reasons a borrower would pursue a short sale. For instance, profiting more from the sale is generally not a motivator in a short sale scenario, as the sale price is typically less than what is owed on the mortgage. Securing a better interest rate or refinancing existing debt are also not outcomes of a short sale, as these actions involve the borrower keeping the property and renegotiating loan terms rather than selling. Thus, the focus remains on avoiding the more severe implications of foreclosure.