Finance
In Colorado, a 'due-on-sale' clause in a mortgage means:
AThe seller must pay the buyer's closing costs
BThe entire loan balance becomes due when the property is sold or transferred✓ Correct
CProperty taxes are due at the time of sale
DThe broker's commission is due at the time of sale
Explanation
A due-on-sale (or acceleration) clause requires the full loan balance to be repaid when the property is sold or title is transferred. This prevents buyers from assuming existing loans without lender approval.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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