Question

What does it mean when economists say that home buyers are "underwater" on their mortgages? multiple choice buyers are financially incapable of repaying their mortgages and bankruptcy is inevitable. buyers are purchasing homes on flood plains and are highly susceptible to financial losses. buyers owe more on their mortgage than the properties are worth. buyers are paying interest rates substantially higher than current market interest rates, creating interest payments that create financial hardship?

Answer 1

Answer: buyers owe more on their mortgage than the properties are worth. When economists say that home buyer are "underwater" on their mortgages, it means that mortgages are with negative equity or the home loan amount is much higher than the market value of the home.