Finance
What is a 'due-on-sale' clause in a mortgage?
AA. A provision requiring the seller to pay off all liens before closing
BB. A provision allowing the lender to demand full repayment when the property is sold or transferred✓ Correct
CC. A requirement that the buyer pay points at closing
DD. A clause that adjusts the interest rate when the property sells
Explanation
A due-on-sale clause (alienation clause) gives the lender the right to demand immediate repayment of the loan balance when the property is sold or transferred. It prevents buyers from assuming low-rate mortgages without lender approval.
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