Finance
What is a 'due-on-sale clause' in a Kansas mortgage?
AA clause requiring the borrower to pay a prepayment penalty
BA clause requiring the full loan balance to become due if the property is sold or transferred✓ Correct
CA clause setting the interest rate adjustment schedule
DA clause allowing the lender to demand payment if property taxes are unpaid
Explanation
A due-on-sale (alienation) clause requires the entire mortgage balance to be paid when the property is sold or transferred, preventing assumption of the loan without lender approval.
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Key Terms to Know
Discount Points
Prepaid 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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Math Concepts
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