Finance
A Michigan seller who provides owner financing by carrying back a second mortgage takes on which primary risk?
ALiability for the buyer's property taxes
BDefault risk if the buyer stops making payments✓ Correct
CResponsibility for property maintenance
DLiability for the first mortgage if the buyer defaults
Explanation
When a seller carries back a second mortgage (seller financing), the primary risk is that the buyer will default on payments. The seller then faces the time and expense of foreclosure to recover their collateral.
People Also Study
Related Michigan Questions
- An adjustable-rate mortgage (ARM) in Michigan carries the risk that:Finance
- Which exemption under the federal Fair Housing Act allows a Michigan owner to sell their single-family home without using a real estate agent in a discriminatory manner?Fair Housing
- In Michigan, a property that has been properly staked and surveyed provides which benefit at the time of sale?Escrow & Title
- In Michigan, a property owner who discovers heating oil tank contamination on their property should:Environmental
- What is the primary purpose of Private Mortgage Insurance (PMI) in Michigan conventional loans?Finance
- A Michigan property owner who wishes to use their property in a way that deviates slightly from strict zoning requirements may apply for:Land Use & Zoning
- A Michigan buyer takes out a $180,000 mortgage. Points paid at closing are 2 points. How much does the buyer pay in points?Real Estate Math
- In Michigan, a property owner who discovers contamination on their property is generally required to:Environmental
Key Terms to Know
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.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Study This Topic
Practice More Michigan Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Michigan Quiz →