Finance
The phrase 'subject to' in a mortgage context means:
AThe buyer assumes personal liability for the mortgage
BThe buyer takes title with the existing mortgage remaining but does not personally assume the debt✓ Correct
CThe mortgage is subject to renegotiation
DThe property is subject to foreclosure
Explanation
Buying 'subject to' an existing mortgage means the buyer acquires title with the existing lien remaining, but the original borrower remains personally liable if the new owner stops making payments.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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