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Question: 1 / 400

What does it mean to have negative equity in a house?

The home is worth less than the mortgage owed

Having negative equity in a house means that the current market value of the home is less than the amount still owed on the mortgage. In this scenario, if a homeowner needs to sell their property, they would not be able to recoup the full mortgage amount, resulting in a financial loss. This situation can arise from various factors such as declining property values, economic downturns, or taking out a large mortgage relative to the home's market value.

The other options describe different circumstances unrelated to negative equity. For example, a fully paid-off home indicates positive equity, while renting out a home doesn't necessarily reflect on equity at all. Similarly, having paid more than the market value relates to perceived investment rather than the current financial standing against the mortgage.

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The home is fully paid off

The home is rented out

The homeowner has paid more than the market value

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