A 'due-on-sale' clause in a deed of trust allows the lender to:
Why Demand full repayment of the loan when the property is transferred to a new owner Is Correct
Answer B: Demand full repayment of the loan when the property is transferred to a new owner
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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Key Terms to Know
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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