Finance
A mortgage assumption in Kentucky occurs when:
AA new borrower is added to an existing mortgage
BA buyer takes over the seller's existing mortgage obligations✓ Correct
CThe lender reassigns the mortgage to a new servicer
DThe borrower pays off the mortgage early
Explanation
A mortgage assumption allows a buyer to take over (assume) the seller's existing mortgage, including the interest rate and remaining balance, subject to 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.
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.
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.
Math Concepts
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