Finance
A Florida lender's 'due-on-sale' clause in a mortgage means:
AThe full loan balance becomes due when the property is sold✓ Correct
BThe monthly payment is due on the sale date each month
CThe borrower must sell the property if they default
DThe lender must be paid before any other creditors upon sale
Explanation
A due-on-sale (or acceleration) clause requires the borrower to pay the full outstanding loan balance when they sell or transfer the property. This prevents buyers from assuming the existing mortgage without the lender's approval.
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Key Terms to Know
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.
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.
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