Finance
A Kansas buyer assumes an existing mortgage. This means:
AThe buyer takes on the seller's mortgage obligation and the seller is released from liability
BThe buyer takes on the seller's mortgage obligation, though the seller may remain liable unless lender releases them✓ Correct
CThe buyer must refinance the existing loan
DThe lender must approve a new loan
Explanation
When a buyer assumes a mortgage, they take over the debt obligation. Without a release from the lender (novation), the original borrower (seller) may remain secondarily liable.
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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.
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.
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.
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