Finance

Kentucky's assumption of mortgage allows a buyer to take over the seller's existing loan. Most conventional loans contain a clause that prevents assumption without lender approval. This is called a:

ASubordination clause
BDue-on-sale clause✓ Correct
CAcceleration clause
DPrepayment penalty clause

Explanation

A due-on-sale clause (also called alienation clause) requires the full loan balance to be paid when the property is sold, preventing assumption without lender approval. FHA and VA loans are generally assumable; most conventional loans are not.

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