Contracts
An 'acceleration clause' in a Louisiana mortgage means:
AThe interest rate increases if payments are made early
BThe entire loan balance becomes immediately due if the borrower defaults✓ Correct
CThe loan term is shortened if the borrower makes extra payments
DThe lender must approve any property improvements
Explanation
An acceleration clause allows the lender to demand full repayment of the loan balance upon the borrower's default or breach of the mortgage agreement.
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Key Terms to Know
Short Sale
A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
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