Escrow & Title
In Idaho, what is a 'subordination agreement' in real estate financing?
AAn agreement where the lender agrees to lower the interest rate
BAn agreement where a prior lien holder agrees to allow their lien to be subordinate to (rank behind) a new lien
CA tenant's agreement to subordinate their lease to a mortgage
DBoth B and C✓ Correct
Explanation
A subordination agreement can be between lienholders (where a senior lienholder allows a new lien to take priority) or between a lender and tenant (where the tenant agrees their lease is subordinate to the mortgage). Both scenarios exist in Idaho real estate.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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