In Alaska, a purchaser buys property with an existing mortgage they assume. If the seller is released from the debt by the lender, this is called:
Why Novation Is Correct
Answer B: Novation
Exam Tip: Escrow & Title
Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.
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Related Alaska Questions
- A buyer assumes the seller's existing mortgage. The buyer is now primarily liable for the debt, and if the lender releases the seller from the original obligation, this is called:Finance
- An Alaska property has a mortgage constant of 7.2% and an NOI of $54,000. If the debt coverage ratio requirement is 1.2, what is the maximum loan amount the lender would approve?Finance
- Under the Alaska Uniform Vendor and Purchaser Risk Act, if a property is substantially destroyed after the contract is signed but before closing, and neither party is at fault, who bears the loss?Contracts
- Alaska is classified as a lien theory state. This means that when a borrower obtains a mortgage:Finance
- In Alaska, which type of mortgage clause allows the lender to demand full repayment of the loan upon the property's sale?Finance
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- A mortgage lender in Alaska charges a higher interest rate to an applicant because of the neighborhood where the property is located, which has a predominantly minority population. This practice is known as:Fair Housing
- A borrower in Alaska has a debt-to-income (DTI) ratio limit of 43%. Their gross monthly income is $6,500. What is the maximum total monthly debt payment allowed?Real Estate Math
Key Terms to Know
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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