Finance
In Michigan, a mortgage that is assumable allows:
AThe lender to sell the loan to another lender
BA new buyer to take over the existing mortgage terms from the seller✓ Correct
CThe borrower to lower their rate annually
DThe property to be sold without a real estate agent
Explanation
An assumable mortgage allows a qualified buyer to take over (assume) the seller's existing mortgage, including its interest rate, remaining balance, and terms, potentially benefiting the buyer if the existing rate is lower than current market rates.
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Key Terms to Know
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.
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.
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.
Math Concepts
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