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With the housing market crash back in 2008, real estate experts and news outlets started talking about a lot of different real estate terms. Many of those terms were not widely used until the crash, so a lot of people were unsure of what they meant. There are several real estate terms that became very popular in NJ real estate and all over the country because of the housing market crisis. Short sales have been very common since 2008. With a short sale, the home owner notifies that bank that he or she cannot afford to make payments on the mortgage any longer. The bank and the home owner decide to sell the home for a lesser amount than what is actually owed on the house. For example, if the home owner still owes the bank $150,000 for a house, the bank may short sell the house for $130,000 in order to make a small profit. Foreclosures were ever more common during the housing market crash. Foreclosures are similar to short sales only in that the home owner can no longer make the mortgage payment. With a foreclosure, however, the home owner completely gives up his or her rights to the house, and the bank takes the home. The homeowner is not given any sort of compensation, and he or she must usually pay hefty fines and suffer major credit damage when foreclosing. The bank then attempts to resell the home on the market in the form of a public auction. Refinancing refers to changing the mortgage obligation to a different mortgage obligation. For example, if a person can no longer afford to make his or her mortgage payments, that home owner may decide to refinance for a smaller monthly payment. However, refinancing typically involves exchanging a smaller interest rate with a larger one.
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