Finance
An acceleration clause in a mortgage allows the lender to:
ALower the borrower's interest rate during economic downturns
BDemand full repayment of the outstanding loan balance upon default or certain triggering events✓ Correct
CExtend the loan term if the borrower requests it
DTransfer the loan to a different borrower
Explanation
An acceleration clause allows the lender to declare the entire outstanding balance of the loan immediately due and payable upon the borrower's default or upon the occurrence of specified events (e.g.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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